Top Biz News
Geely taps China banks to back Volvo deal: sources
(Agencies)
Updated: 2009-12-01 17:41
Geely, the Chinese carmaker tagged as the preferred bidder for Ford Motor's Volvo unit, is seeking at least $1 billion in loans from Chinese banks to finance its $1.8 billion bid, sources said on Tuesday.
At least three major Chinese banks including Bank of China, China Construction Bank and Export-Import Bank of China had agreed to extend loans to Zhejiang Geely Holding Group, said the banking sources briefed on the plan.
"Money is not a problem for Geely," said a source. "They definitely have strong support from Chinese banks and there are a number of private equity funds queuing up to invest in Geely."
Export-Import Bank of China is a policy lender wholly owned by the Chinese government and directly led by the cabinet. Bank of China is China's top foreign exchange lender. China Construction Bank is the country's No 1 property lender.
The loans backing Geely's bid for Volvo are expected to have a five-year tenor, said another of the sources, who declined to be identified as they were not authorized to speak to the media.
Geely declined to comment.
Bohai Industrial Investment Fund, a private equity fund backed by the Chinese government, was also in talks with Zhejiang Geely Holding Group, the parent of Hong Kong-listed Geely Automobile, to support its bid for Volvo, said the sources.
However, no agreement between Bohai and Geely had been reached and Bohai's investment would only be a small part of Geely's acquisition of Volvo, said the sources.
In September, Goldman Sachs invested $334 million in Geely Automobile, although Geely said Goldman's money would mainly support its domestic car plant expansion.
