Geely shares jumped by 26 percent after the news broke, with Geely saying it "will issue convertible bonds and warrants to an affiliate of Goldman and will use proceeds for capital expenditure, working capital and potential acquisitions", Autonews reports.
Goldman, should it choose to fully convert the bonds and warrants, will end up owning 15.1 percent of the Chinese company. The $334 million in bonds will be issued to Goldman affiliate GS Capital Partners VI Fund LP.
"We hope Goldman can help us to improve our operating efficiency, and that Goldman's network will help in our long-term development," Lawrence Ang, Geely executive director was quoted as saying by the source.
Although so far Geely or its mother company have made no official move towards submitting a bid for Volvo, it becomes more and more obvious the Chinese are determined to expand outside China.
Rumors have gone as far as saying that if a Volvo offer fails, Geely may turn its sights on Opel, by signing some type of partnership with Magna. Such an outcome is perceived, however, as very unlikely.
"I think it will be hard for Geely to have a piece of the Opel deal in the first place. Magna's already got a Russian partner and involvement from a Chinese firm will make it very complicated," Li Mengtao, an analyst with Sinolink Securities said. "It also makes little sense for Geely if it ends up being a minority shareholder with little access to the technologies it desperately needs."
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