Shanghai - Chinese carmaker Geely Automobile said on Wednesday it will raise about $334m in a deal with an affiliate of Goldman Sachs, building up cash for a possible takeover of Ford Motor's Volvo Cars.
By midday, shares in Geely's Hong Kong-traded unit were up 18% at 2.11 Hong Kong dollars after the company announced it would issue HK$2.586bn ($334m) in convertible bonds and warrants to Goldman Sachs Capital Partners VI Fund.
The money raised will be used to pay for potential acquisitions and other needs, Geely said in a statement to the Hong Kong Stock Exchange.
If the Goldman Sachs fund fully converts the bonds and exercises the warrants issued by Geely it could hold 15.1% of the Chinese company's enlarged share capital.
Geely's announcement made no mention of the company's interest in Volvo, though a company spokesperson confirmed earlier that the Hangzhou-based carmaker's parent company was considering bidding for the Swedish carmaker.
Geely, one of China's leading domestic carmakers, is among several Chinese companies that have shown interest in Volvo and other European car companies.
Chinese domestic carmakers like Geely lag behind their global rivals in many ways and are eager to improve their competitiveness by acquiring foreign brands that might help them improve their technology and expand into overseas markets.
State-owned Beijing Automotive has announced a preliminary deal to become a minority stakeholder in Angelholm, Sweden-based Koenigsegg Group AB, which was looking for additional financing to complete its takeover of General Motors' Saab Automobile.
Another Chinese company, construction machinery maker Sichuan Tengzhong Heavy Industrial Machinery, is awaiting regulatory approval of its bid to acquire GM's Hummer unit.
- AP