Manufacturing News

Geely discloses sources of funding for Volvo deal

Zhejiang Geely Holding Group Co. president Li Shufu shed some light last week on the sources of the finances his company has raised for its acquisition of the Swedish car brand Volvo.

Geely offered $1.8 billion to purchase the Volvo brand and related assets which mainly include intellectual property. It has also pledged to provide some $900 million as working capital to support the operations of Volvo Car, according to information the Chinese company disclosed at a press conference held on March 30 in Beijing.

"About 50 percent (of the total funding) was from the domestic market while the other 50 percent was from overseas markets including the United States, Europe and Hong Kong," said Li at the event.

Of the 50 percent of the funding it raised in China, about half is Geely's own money and a small amount was provided by "some other domestic investors," Li added. 

Meanwhile, according to Geely's CFO Yin Daqing who also participated in the media briefing, some of the money Geely raised domestically was borrowed from banks directly controlled by the Chinese government. 

Li and Yin declined to provide further details on the financing of the Volvo deal. 

Geely signed a definitive agreement with Ford Motor Co. on March 28 to buy Volvo Car Corp.

Geely and Ford expect to close the Volvo deal in the third quarter of 2010.

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