Nio secures new $2.2 billion investment from Abu Dhabi’s CYVN
CYVN will increase its stake in Nio to about 20 percent with its latest investment, after finishing a roughly $1.1 billion investment in July.
Nio (NYSE: NIO) has secured a new round of financing from Abu Dhabi government fund CYVN Holdings LLC, which has expanded its stake in the Chinese electric vehicle (EV) maker to about 20 percent.
Nio entered into a share subscription agreement with CYVN.Upon closing of the December investment transactions, CYVN will beneficially own about 20.1 percent of the total issued and outstanding shares of Nio, according to the EV maker’s statement today.
The December investment transaction is subject to customary closing conditions , Nio said, adding that both the investor and the company are subject to certain lock-up arrangements for six months after the closing of the latest transaction.
Following the closing of the latest investment, CYVN will have the right to nominate two directors to the board of Nio for so long as it continues to beneficially own not less than 15 percent of the company’s issued share capital.
If CYVN beneficially owns less than 15 percent but more than 5 percent of Nio’s issued share capital, it will have the right to nominate one director to the company’s board.
Following the closing of the investment transaction in December, Nio and CYVN and its subsidiaries will continue to work together to pursue strategic and technical collaborations in international markets, according to the statement.
For its part, CYVN said the move is a continuation of its strategy in the mobility space and its confidence in Nio.
“Our increased investment in Nio represents a continuation of our ongoing strategy to build a leading global portfolio in the mobility space,” said Jassem Al Zaabi, Chairman and Managing Director of CYVN Holdings.
“This transaction demonstrates our confidence in Nio’s unique positioning and competitiveness in the global smart EV industry. We are excited to be a long-term strategic partner of Nio and support its efforts in product innovation, technological breakthroughs and international market expansion,” Al Zaabi said.
Nio saw weak deliveries in the first half of the year as several NT 1.0-based models switched to the latest NT 2.0 platform.
The weak deliveries put financial pressure on Nio, whose revenue fell to RMB 8.77 billion in the second quarter and gross margin dropped to 1.0 percent.
As deliveries improved in the second half of the year, Nio’s financial position improved in the third quarter, with revenue rising to a record RMB 19.07 billion and gross profit rebounding to 8 percent.
On December 6, Reuters reported that Nio plans to spin off its battery manufacturing unit, which could take place as early as the end of this year, after which the battery unit will seek outside investors.
A person familiar with the matter said the spin-off underscores Nio’s efforts to become profitable more quickly, as the company’s previous plan was to develop and manufacture some batteries on its own and outsource production of the rest to other suppliers.