Car companies are short of money to go to the Middle East, NIO has received 1.10 billion dollars
Entrepreneurship State (ID: ichuangyebang) Original
Author: Pan Lei
EditorShu Sea waist
NIO official account
Middle Eastern billionaires suddenly "sweep" NIO.
On the evening of the 20th, NIO officials announced the explosive news of obtaining up to 1.10 billion US dollars in strategic investment from Middle Eastern investment institutions.
The Chinese electric vehicle new power head company said it has signed a share purchase agreement with Abu Dhabi investment agency CYVN Holddings, which will complete the investment through private placement and old share transfer, and eventually hold about 7% of NIO’s shares and get a board seat.
Due to the "transfer of old shares" involved, it has raised speculation that Li Bin or NIO’s early investors are cashing out.
But details later revealed that Tencent had reduced its old holdings, cashing out about $350 million at $8.72 a share.
According to the Forbes real-time global rich list, Li Bin’s own wealth has not changed significantly, and he is still ranked in 1988 with a wealth of 1.50 billion US dollars.
In terms of capital markets, it may have been expected that the strategic investment news failed to boost NIO’s share price. The latest closing price was $9.36, down 0.43%.
Middle East sweeps Chinese new energy vehicle companies?
CYVN Holddings looks like an institution specifically created to invest in NIO.
So far, the vast majority of messages from this agency that have appeared on the Internet are related to NIO.
NIO’s official announcement said that CYVN Holddings is an investment institution majority-owned by the Abu Dhabi government.
According to other information, Jassem AI Zaabi, the chairperson of CYVN Holddings, is the finance minister of Abu Dhabi and a director of several sovereign funds.
The injection of about $1.10 billion consists of two parts – about 85 million additional Class A common shares for $738.50 million in cash, and about 40 million shares from Tencent for $350 million.
Li Bin said that it took only three weeks to finalize the investment.
He stressed that this investment will optimize NIO’s balance sheet and provide an opportunity to expand its international business.
According to Q1 earnings data, NIO, headquartered in Shanghai, China, has suffered from sluggish sales. It delivered 43,854 new cars in the first five months of this year, including ET5 and other models. Sales did not meet expectations, and the net loss exceeded 4.70 billion yuan.
So NIO began to fight a price war, lowering the entire series of models by 30,000 yuan this month.
But this round of price cuts did not reach the effect of previous Tesla price cuts in China – Tesla once had its official website down for a time because of lower prices.
The poor financial numbers have added to concerns about NIO’s continued decline in the highly competitive Chinese market.
CYVN Holddings’ investment is a timely move for NIO, giving it more resources to revive its business.
The roughly 7% stake in NIO and a board seat will not allow control of NIO to change hands for the time being, but no one knows what CYVN Holddings will do next.
It is worth noting that investment institutions from the Middle East have recently increased their investment in China’s electric vehicle industry chain.
In the middle of this month, the Saudi Investment Ministry and Chinese electric vehicle company China Express reached an agreement worth up to $5.60 billion to jointly establish a joint venture.
Source: Tuchong Creative
NIO is clearly the latest beneficiary of this boom.
NIO is either financing or on the way to financing
Being able to attract new investment seven or eight years after the company was established means that Li Bin has never lost his ability to seize financing opportunities.
This makes NIO the king of financing.
According to the data of Rui Beast Analysis, in June 2015, NIO completed a round of financing of hundreds of millions of yuan, with investors including Tencent, Shunwei Capital, JD.com, Hillhouse Capital, Yiche, Li Xiang, and others.
The people behind these institutions, such as Pony Ma, Lei Jun, Liu Zedong, and others, can be called the heavenly group of China’s Internet industry.
With these boss platforms, just three months later, NIO implemented the B round of financing – Sequoia China and Joy Capital slapped the horse and sold it for $500 million.
This made NIO popular in the investment and financing market at that time, and the halo effect began to spread.
In June 2016, NIO completed two rounds of investment almost simultaneously, with Temasek Holdings, Hopu Investment, Lenovo Venture Capital, and TPG successfully entering the market, with a financing amount of hundreds of millions of yuan.
2017 was the peak year for NIO’s financing.
This year, a total of three rounds of financing were completed, and the two financing of the disclosed amount were 20 billion yuan and 1 billion US dollars respectively.
Baidu, Today Capital, IDG, Haitong International, Legend Capital, Warburg Pincus, CITIC Capital and other institutions, as well as old shareholders such as Hopu Investment, Hillhouse, and Tencent, continue to bet on NIO, which is about to push the new car offline and prepare for an IPO in the United States.
In September 2018, NIO was listed on the New York Stock Exchange.
But Li Bin later believed that the listing was not a success, "I wanted to raise 2 billion dollars, but only raised 1.10 billion. Less than 900 million dollars is still fatal for NIO".
The fatality quickly became apparent as NIO struggled in 2019, with its share price falling as low as $2.
Li Bin has also been called "the worst person in 2019".
Beginning in 2020, as NIO’s share price soared, it attracted many financial investors.
This is a heaven-sent opportunity for Li Bin, so he began to use fixed increase means frequently and continued to raise proceeds.
NIO received almost $2 billion in funding from Morgan Stanley, Bank of America Merrill Lynch, Tencent, and a strategic investment of 7 billion yuan from Hefei.
At the end of 2020, NIO made another big vote – the maximum fundraising amount of this round of increase plan exceeded 3 billion US dollars.
After this round of increase, Li Bin holds 11% of NIO’s shares, with 40.5% voting rights, and another major shareholder, Tencent, holds 11% and has 18% voting rights.
In 2022, NIO went public in Hong Kong and Singapore respectively, continuing to make money.
This year, CYVN Holddings joined NIO’s shareholder Moments for $1.10 billion.
NIO’s financing map shows that most of the financing is related to timing – Li Bin is one of the earliest and most watched players in the rise of China’s new car-making power; although the listing in the United States did not sell for a good price, the stock rise cycle of dozens of times in 2020 gave NIO billions of dollars in funds; now that the oil-rich countries in the Middle East want to exchange their dollars for equity, Li Bin is once again leading the way.
Will NIO be acquired next?
The next move of Abu Dhabi investment agency CYVN Holddings is unknown.
NIO said that this strategic investment provides opportunities for both parties to expand into international markets.
If CYVN Holddings just wanted to help NIO sell its cars, it could actually achieve its goal by being a dealership without having to spend money on equity.
So the Middle Eastern investor may not be a single-minded "financial investor".
Given the scale of the Middle East’s energy transition plans, there is a potential opportunity for cooperation – such as the acquisition of a majority stake in NIO?
NIO’s high-end positioning, pure electric technology route, power exchange and energy supplementation system, and accumulated experience in service are all in line with the appetite of the local tyrants in the Middle East.
Moreover, with the appeal of NIO, it may even be able to bring an industrial chain – this is the dream of the Middle East.
At the same time, there is no need to worry about vehicle sales.
Since Saudi Arabia can underwrite 100,000 Lucid units, and the Abu Dhabi government underwrites 50,000 NIO units, it should not be a problem.
But everything depends on NIO founder Li Bin.
If he wants to focus on new projects, such as controlled nuclear fusion, it will be simple – Abu Dhabi’s checkbook may already be ready.
The case of Mobike shows that Li Bin will pull the trigger at some point if necessary.
Whether NIO will follow the same path remains to be seen.
At least for the next few years, NIO will remain at the center of the conversation among China’s new automakers until it finds its place.
"The [rich] in the Middle East are clearly sweeping up Chinese new energy vehicles." According to a person from a leading investment institution, [the swept goods] are all companies that have encountered some problems.
For NIO’s old shareholders to cash out, he believes it is not easy to operate.
In addition, in his opinion, the Middle East also has unique conditions for the development of new energy.
"The sunshine there is very long, and it has advantages in photovoltaics and hydrogen production. It can continue to serve as a global energy hub, and there are also top-level plans like’Vision 2030 ‘. In this context, it is also logical to cooperate with Chinese electric vehicle brands."