The group of investors comprises two Swedish pension funds, AMF and the First Swedish National Pension Fund (AP1), as well as Folksam, a Swedish insurance company.
The preference shares may be repurchased or converted into listed ordinary shares upon the majority shareholder’s decision. At this time, no decision has been taken.
The issuance has been conducted to further diversify Volvo Cars' long term funding sources.
The detailed terms of the sale have not been disclosed, but the transaction will have an immaterial dilutive effect on the current 100 per cent ownership of Volvo Cars by Zhejiang Geely Holdings.
The share sale follows two bond issues earlier this year, a EUR500m bond to global institutional investors in May, and a further SEK3bn to Swedish institutional investors in November. The bonds were issued for general corporate purposes and aimed at increasing the company's financial flexibility.
"Volvo Cars’ financial performance is strong. It is expected that 2016 will be another record year in terms of sales, with growth coming across the board from its three main sales regions of Europe, China and the US," a company statement said.
Operating profit for the first nine months of the year was SEK7.7bn compared to a full year operating profit for the whole of 2015 of SEK6.6bn, prompting Volvo Cars' expectations for the full year to "substantially improve" profits compared to last year.
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