STOCKHOLM, June 28 (Reuters) - Li Shufu’s Zhejiang Geely Holding Group intends to remain a long-term investor in Swedish truckmaker AB Volvo, a source close to the Chinese firm said, denying media reports that it was gearing up to sell its stake.
Geely became Volvo’s second largest owner by voting rights last June after assuming an 8.2% stake in the company that came with 14.9% voting rights.
The move followed Geely’s purchase of a 10% stake in Volvo’s main rival Daimler, raising questions in Sweden about its intentions for one of the country’s largest employers.
Swedish daily SvD reported on Thursday that Geely had borrowed 4 billion Swedish crowns ($431 million) against its Volvo shares in a setup that would allow the borrower a choice to convert his securities into Volvo shares after three years.
The newspaper quoted experts as saying that this was the first sign that Geely could dump its holding.
“This is absolutely wrong. Zhejiang Geely Holding Group will continue to be a long-term investor in AB Volvo,” a source close to Geely said.
A spokesman for Volvo deferred all questions to Geely and said that while the truckmaker had an open dialogue with its shareholder on many fronts, it would not be drawn into any specifics.
While Geely has managed to strike several deals with Daimler since gaining exposure to the company, it has not managed to build similar inroads at Volvo, managing to secure neither board representation nor any new partnerships since last June.
$1 = 9.2809 Swedish crowns Reporting by Esha Vaish in Stockholm; Editing by Jan Harvey