Chinese electric car manufacturer Nio has secured a nearly $1.1 billion investment package. The investment comes from the Abu Dhabi government fund CYVN Holdings.
Here are the key details:
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Investment Details:
- CYVN Holdings will acquire approximately 84.7 million newly issued ordinary shares of Nio, valued at $738.5 million.
- The price per share in this transaction is $8.72.
- Additionally, CYVN Holdings has entered into a purchase agreement with an affiliate of Tencent, an existing Nio shareholder, to purchase about 40.1 million Nio shares worth approximately $350 million.
- After completing these two deals, CYVN Holdings will hold around 7% of Nio.
- The deal is expected to close in early July.
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Strategic Partnership:
- Along with the financial investment, CYVN Holdings and Nio plan to collaborate and explore opportunities in Nio’s international business.
More details
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Nio’s Financial Performance:
- Nio has experienced losses in its stock market performance, with shares declining by 85% since the beginning of 2021.
- In the first quarter of 2023, Nio’s revenue was approximately 10.7 billion yuan (€1.36 billion), a 7.7% increase compared to the same period in 2022 but a 33.5% decrease compared to the previous quarter.
- However, Nio’s net loss for Q1 2023 was around 4.7 billion yuan (€610 million), reflecting a 165.9% increase compared to the same period last year but an 18.1% decrease compared to the previous quarter.
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Vehicle Deliveries:
- Nio faced challenges in the second quarter, with only 6,658 vehicle deliveries in April and 6,155 in May.
- The conversion of some models from the NT1.0 to the NT2.0 platform has halted production, causing Nio to miss out on the growing EV market in China, which saw a resurgence in May.
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Financial Position:
- As of March 31, Nio had 37.8 billion yuan in cash, cash equivalents, restricted cash, short-term investments, and long-term time deposits.
- The investment from CYVN Holdings is expected to provide Nio with additional financial flexibility.
Quote
“The strategic investments from CYVN Holdings demonstrate NIO’s unique values in the smart electric vehicle industry. The Investment Transaction will further strengthen our balance sheet to power our continuous endeavours to accelerate business growth, drive technological innovations and build long-term competitiveness,” said Chairman and Nio CEO William Bin Li.
“We are also excited about partnering with CYVN Holdings to expand our international business. With the vision of Blue Sky Coming, we will continue to strive for technological breakthroughs and user experiences beyond expectations, contributing to a more sustainable future for the globe.”
Conclusion
The investment from CYVN Holdings is expected to provide Nio with additional financial resources and flexibility. This comes at a time when Nio has been facing stock market losses and challenges in its financial performance.
The company’s shares have been declining for over two years, and its financials show a net loss of around 4.7 billion yuan in the first quarter of 2023.
Furthermore, Nio has experienced production delays due to converting certain models to a new platform, impacting its vehicle deliveries and preventing the company from capitalizing on the growing EV market in China.
Despite these challenges, the investment from CYVN Holdings offers Nio the opportunity to strengthen its financial position and pursue opportunities in its international business with the support of its new partner.
