Thursday, September 24, 2009
China carmaker gets Goldman cash
Chinese carmaker Geely Automotive has received a $334m (£204m) investment from major US bank Goldman Sachs to help fund expansion.
Geely's shares surged 26% after it said it was selling financial instruments to a unit of Goldman that could lead to it owning a 15.1% stake in the carmaker.
The move comes as Geely and other Chinese carmakers try to grow globally.
Geely used to make the cheapest cars in China but it has been moving towards appealing to more affluent customers.
It has previously said its parent company would bid for Volvo if Ford decides to sell the Swedish firm, a deal that could be worth about $2bn.
Geely, which is currently a relatively small domestic carmaker, already has a joint venture with Manganese Bronze to make 8,000 London taxis in China.
Global ambitions
"It's a wise move for Geely as it can use the money to build up capacity and free up capital for its parent, which has publicly announced its interest in Volvo," said Yi Junfeng, an analyst with Changjiang Securities.
Geely is selling the financial instruments, which give the buyer the option to be converted into shares at a future date, to GS Capital Partners VI Fund LP, an affiliate of Goldman.
Chinese carmakers have expressed a great deal of interest in buying international car brands - with Sichuan Tengzhong Heavy Industrial Machinery agreeing to buy the off-road Hummer brand from General Motors.
Nanjing Automobile bought the assets of MG Rover in 2006 and Shanghai Automotive may end up owning a stake in Saab Automobile as part of the takeover by the luxury carmaker Koenigsegg.
DATED: 24.09.09
FEED: AW
