Volvo tanks on Geely stake sale

Volvo Cars tanked on Friday after majority shareholder Zhejiang Geely Holding Group began selling around 100m shares in the car maker in a placing.

China’s Geely in a statement that it had decided to release more of its shareholdings in Volvo "in accordance to its long-term strategy to enhance the value of the Nasdaq Stockholm listed Swedish carmaker through an increase of liquidity and offer more opportunities to generate sustainable long-term value for institutional and retail investors".

Once the share sale program completes, its shareholding in Volvo Cars will be 78.7%.

Geely said proceeds will be used to support global business development within the group.

Geely chief executive Daniel Donghui Li said: "Volvo Cars is today one of the world’s fastest-growing carmakers and most iconic car brands.

"As the majority shareholder, we remain steadfast in our commitment to continue our support of Volvo Cars on its transformation towards becoming a fully electric car maker, and we look forward to continuing this ongoing global success story."

Volvo chief executive Jim Rowan said: "This increase in our public float and improvement in trading liquidity benefits both new and existing investors. It allows a wider base of shareholders to invest in Volvo Cars. We thank Geely Holding Group and all our shareholders for their continued support."

At 1300 GMT, the shares were down 10.8% at SEK36.42.