Geely to raise $334 mln from bond sale to Goldman

Geely Automobile Holdings Ltd., China's largest private automaker, will raise HK$2.59 billion ($334 million) selling convertible bonds and warrants to a fund managed by Goldman Sachs Group Inc.

GS Capital Partners VI Fund LP will own 15.1 percent of the carmaker should it convert the bonds to shares and exercise the warrants, Geely said in a Hong Kong stock exchange statement today. Some of the proceeds will be used for potential acquisitions, according to the statement.

The investment may help Geely finance new technology and its overseas expansion plans, which include a possible bid by its parent for Volvo Car Corp. The deal may also boost Geely's shares -- BYD Co., a Chinese maker of electric cars, has jumped more than fivefold since agreeing to sell a stake to Warren Buffett's Berkshire Hathaway Inc. last year.

"There's a psychological impact," said Vivien Chan, an analyst with SinoPac Securities Asia Ltd. "A major fund investing in Geely will send a signal that the market has a positive expectation."

Geely Auto, which has more than doubled this year, closed at H$1.79 on Sept. 15, the last day it traded. The benchmark Hang Seng Index has gained 51 percent in 2009. The stock will resume trading today.

Ford, Volvo

A Volvo deal may help Geely meet founder Li Shufu's target of getting 66 percent of sales from overseas by 2015 compared with 5 percent in the first half.

Dearborn, Michigan-based Ford, the only U.S. automaker to decline a federal bailout, put Volvo up for sale in December as it abandoned a luxury-auto strategy. Ford is seeking about $2 billion for Gothenburg, Sweden-based Volvo, less than a third of what it paid a decade ago, two people with knowledge of the sale said in May.