Nio gets $1.9 billion injection from parent, investors
Strategic investors have agreed to invest USD 470 million in cash in Nio China. The carmaker has also agreed to invest USD 1.4 billion in cash to subscribe to the newly issued shares of Nio China.
China’s Nio has received cash infusion amid a push by the electric vehicle company into the low-end market segment with its Onvo brand of vehicles.
Strategic investors, including Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment Co., Ltd. and CS Capital Co., Ltd., have agreed to invest an aggregate of 3.3 billion yuan (USD 470 million) in cash in its subsidiary Nio China, according to a report in Benzinga.
At the same time, the Shanghai-based carmaker has agreed to invest 10 billion yuan (USD 1.4 billion) in cash to subscribe to the newly issued shares of Nio China.
Nio will hold 88.3% of controlling interest in Nio China, down from 92.1%.
Strategic investors along with existing shareholders will hold the remaining 11.7% equity interest.
With “an enhanced balance sheet,” Nio will be “strategically positioned” to maintain its advantages in technology, products, services and user community, promote a multi-brand strategy, succeed in broader markets, and “propel the company into the next stage of sustainable growth”, Nio said in a statement, according to the South China Morning Post (SCMP).
“We believe this new investment will resolve the company’s fundraising debate and enhance near-term cash flow,” Morgan Stanley said in a research note, as reported by Bloomberg. “The investment from existing shareholders of Nio China should further enhance Nio’s balance sheet.”
Nio also has the rights to invest another 20 billion yuan for additional shares in Nio China by the end of 2025.
The company has never been profitable. It reported a 4.5 billion yuan loss for the second quarter. However, its quarterly sales increased to 17.5 billion yuan, slightly higher than analysts' expectations.
Last year Nio clinched an agreement to receive USD 2.2 billion from Abu Dhabi-backed CYVN Holdings LLC.
Early this month, Nio said it expected delivery volume in the third quarter to rise by as much as 10% to an all-time high, driven by state subsidies and increasing demand from younger buyers, the SCMP report said.
It estimated that 61,000 to 63,000 EVs would be sold in the three months to September 30, compared to 57,373 units sold in the previous quarter.
The company unveiled its L60 SUV this month under the brand Onvo to take on Tesla’s Model Y.
