China Automobile Industry News

A Goldman Sachs private-equity fund is investing about $250 million in Geely's Hong Kong-listed arm to fund the auto maker's growth ambitious.


Geely Automobile Holdings Ltd. is expected to announce the investment by Goldman Sachs Capital Partners on Monday, a Geely executive said.
 
The Goldman Sachs fund is investing in convertible bonds and warrants that will give its funds a minority stake in the Chinese automaker, according to the person familiar with the matter. The size of the stake was unclear. The listed arm has a market capitalization of about $1.68 billion, according to FactSet Research Systems Inc., a research firm.




Geely said Wednesday that it planned to issue convertible bonds and warrants without naming Goldman Sachs Capital Partners as the buyer.



The Hong Hong-listed Geely arm plans to use the money to fund its working capital as it expands. That could free up capital for its parent to bid for Ford Motor Co.'s Volvo unit.


People familiar with the matter have said Ford was likely to pick Geely Holding soon to take over Volvo -- a sign of its global ambitions. Geely Auto confirmed earlier this month that its parent was bidding for Volvo with an unnamed state-owned investment company.




International investors have in recent months backed major Chinese auto makers, betting they may become global champions. The auto makers are looking to survive a possible wave of consolidation in China's domestic market by snatching up smaller players at home and buying into distressed brands overseas in order to expand sales both domestically and outside the country.



A unit of Warren Buffett's Berkshire Hathaway Inc. agreed last year to pay about $230 million for a 9.9% stake in electric carmaker BYD Co. Earlier this year, Chery Automobile Co. secured backing from yuan-denominated private equity funds managed by CDH Investments and Bohai Industrial Investment Fund Management Co.



Hangzhou-based Geely has made substantial improvement in the engineering and quality of its vehicles since 2006 under Frank Zhao, the company's product development director, who joined Geely from the U.S. auto maker now known as Chrysler Group LLC via a separate Chinese auto maker.