ICBC contributes €200 million EUR to a €3.07 billion EUR syndicated loan to Zhejiang Geely Holding Group for the acquisition of 8.2% of the issued shares in AB Volvo (Linked to Record ID#87111 and #104983)

Project narrative

In May 2018, a syndicate of 16 banks — including China CITIC Bank Corporation Limited, the Bank of China, and the Industrial and Commercial Bank of China (ICBC) — entered into a €3.07 billion EUR ($3.57 billion USD) syndicated term loan agreement with two offshore special purpose vehicles (SPV) of Zhejiang Geely Holding Group Co., Ltd. (ZGH) — a Chinese privately-owned multinational automotive conglomerate headquartered in Hangzhou largely owned by Chinese entrepreneur Li Shufu that is the parent of Geely Automobile Holdings Limited, which is listed on the Stock Exchange of Hong Kong — to finance Geely Holding's acquisition of 8.2% of the issued shares in Swedish truckmaker AB Volvo (publ) (Volvo Trucks). This loan was divided into two tranches: a €2,117,500,000 EUR term loan tranche with a maturity period of five years, an interest rate of EURIBOR plus a maximum comprehensive yield of 180 basis points (bps), and a lump-sum repayment scheme borrowed by one SPV and a €950,000,000 EUR bridge loan tranche with a maturity period of 12 months and an interest rate of EURIBOR plus a maximum comprehensive yield of 130 bps borrowed by the other SPV. Geely Sweden Holdings AB — a Sweden-incorporated company that owns Volvo Car Corporation and itself is a wholly-owned subsidiary of China-incorporated Shanghai Geely Zhaoyuan International Investment Co., Ltd., an indirect wholly-owned subsidiary of ZGH — issued a guarantee for both tranches. The proceeds were to be used by the borrower to finance the acquisition of a 8.2% stake in AB Volvo. Record ID#104983 captures China CITIC Bank's contribution. BOC contributed €120 million EUR to the loan syndicate (its specific tranche-by-tranche breakdown is unknown), as captured by Record ID#87111. ICBC contributed €200 million EUR to the loan syndicate (its specific tranche-by-tranche breakdown is unknown), as captured by Record ID#104984. In addition to China CITIC Bank, ICBC, and BOC, the following lenders are known to have contributed to the loan syndicate: BNP Paribas S.A. and Ping An Bank. 14 banks joined in syndication, eight of which were Chinese banks (including BOC and ICBC), contributing €1.07 billion EUR in total to the loan syndicate. BNP Paribas and China CITIC Corporation served as as lead banks, bookrunners, underwriters, and global coordinators. BNP Paribas also served as loan agent. BNP Paribas and China CITIC underwrote financing and launched it into senior syndication in mid-February 2018, with banks required to commit at least €300 million EUR to the term loan tranche and €200 million EUR to the bridge for top-level all-in prices of 185 bps and 130 bps over EURIBOR, with early-bird commitments due March 7, 2018. Early bird syndication was oversubscribed with several Chinese and international banks joining. Limited syndication closed in May 2018. Withdrawals began on May 27, 2018. The loan closed in July 2018. The deal will give AB Volvo access to Geely’s market knowledge, resources, and technologies. These technologies are benefiting Volvo Cars, which Geely purchased in 2010. As one example, Geely set up a company to create platforms and technologies for its automotive brands, including the CMA hardware for small vehicles. “The agreement will not only give AB Volvo a new large and committed shareholder, but one with significant expertise in strategically important areas for future value-creation, such as electrification, autonomous driving, connectivity, and the Chinese market,” Cevian Capital co-founder Christer Gardell said in a statement. Despite Geely’s new involvement with AB Volvo, the truck company will remain separate from Volvo Cars, which split off from AB Volvo in 1999. AB Volvo offers a range of commercial trucks, construction trucks, and buses and owns a 45-percent stake in Dongfeng Commercial Vehicles, one of China’s largest truck manufacturers.. On December 27, 2017, Geely Holding entered into an agreement to purchase a 8.2% stake in AB Volvo (at contemporary market prices, worth about $3.3 billion USD) from activist investor Cevian Capital; specifically, Cevian would sell the shares to Nomura International Plc and Barclays Capital Securities, which then in turn committed to sell the shares to Geely Holding after receiving regulatory approvals. In January 2018, Cevian sold the shares to Nomura International and Barclays Capital Securities. The €3.25 billion EUR acquisition of the shares was completed on June 28, 2018. AB Volvo was a Swedish manufacturer of trucks, buses, construction equipment, diesel engines, and marine and industrial engines. It was Sweden’s largest industrial company. One of its subsidiaries, Arquus (formerly Renault Trucks Defense), manufactured military vehicles. The acquisition made Geely Holding the largest holder of AB Volvo’s share capital and second largest holder in voting rights with 88.47 million A-shares and 78.77 million B shares. Geely Holding already owned 100% of Volvo Car Corporation, which AB Volvo spun-off of in 1999, though Geely had no plans to reunite the two companies. In April 2024, ZGH sold the entirety of its Class B shares in AB Volvo for kr.14.1 billion SEK ($1.3 billion USD), though it retained its 88.5 million A shares