Geely Automobile Holdings Ltd said on Wednesday its board had approved a preliminary proposal for the possible issue of renminbi shares and a listing on mainland China's Nasdaq-like STAR board.
The Zhejiang-based automaker, whose parent is Zhejiang Geely Holding Group, is currently listed on the Hong Kong Stock Exchange with a market capitalisation of 116.77 billion HKD ($15.07 billion).
Geely Automobile and its sister company Volvo Cars - which Zhejiang Geely Holding Group bought from Ford Motor Co in 2010 - are planning to merge and list in Hong Kong and possibly Stockholm.
Apart from Volvo Cars, Zhejiang Geely Holding Group also holds a 9.7% stake in German luxury automaker Daimler AG, bought in 2018.
It said in a filing that the new renminbi shares on the Shanghai Stock Exchange would not involve conversion of existing shares. The board will hold further talks on the size of the issue.
(Also read: How Geely's Polestar is trying to bring down Tesla's dominance in China)
The money raised will be used for "business development and general working capital of the Group", it said, without elaboration.
"We believe such proceeds are likely to be used for the Volvo merger, although Geely cannot explicitly state it before the merger approval by disinterested shareholders," said Shi Ji, an analyst at Haitong International.
"It is a good way for the company to raise funds as valuations in the A-share market are usually higher than the H-share market," Shi added, comparing mainland and Hong Kong markets.
(Also read: China's Geely raises $836 million from share sale for business development)
Geely Automobile plans to roll out six new models under the Geely, Lynk&Co and Geometry marques this year. It sold 1.36 million cars in 2019 and is targeting sales of around 1.4 million units this year. It reported a profit of 8.19 billion yuan ($1.16 billion) last year.
Last month, it raised 6.48 billion HKD from a share placement.
This story has been published from a wire agency feed without modifications to the text.