Goldman investment would boost Geely' stock prices and repute

• Source: Gasgoo.com
• [13:52 September 23 2009]
• Comments

Goldman Sachs Group Inc's investment in Geely Automobile Holdings may help boost the Chinese automaker's stock prices as well as celebrity, according to newspaper reports.

A Reuters report said Monday that an investment arm of Goldman Sachs is in talks with Geely to buy about $250 million convertible bonds or a stake of nearly 15 percent of Geely, Reuters reported Monday, citing two sources.

"A big name investor certainly helps boost stock prices and brand recognition," Li Lixi, a Northeast Securities Co. analyst in Shanghai, told Bloomberg. "Goldman's investment in Geely may repeat the impact that Buffett had on BYD."

BYD has jumped more than fivefold in Hong Kong trading since agreeing to sell 10 percent stakes for $230 million to Buffett's Berkshire Hathaway Inc last year.

Analysts say in Geely's case, the association with Goldman would provide Geely with the credibility it currently lacks, though the cash itself won't much help Geely realize its dream deal of buying the Volvo.

Geely's annual output is just 300,000 units. Its market share in China is 3 percent, according to JD Power. The Chinese automaker aims to produce 20 million cars in 2015, with 1.3 million overseas. The Goldman investment could help Geely be taken more seriously when pursuing its oversea ambitions.