Nio gets RMB 7 billion in cash injection from Hefei governmentTechNode

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The long-awaited bailout of cash-strapped Nio due to a looming liquidity crunch is finally coming. The electric vehicle maker said on Wednesday it would receive a 7 billion RMB cash injection with final pledges from several state-run capital companies, its biggest funding round since its initial public offering in the United States. United in September 2018.

Why is this important: Nio can now really compete with Tesla, the absolute market leader, and increase its funding opportunities.

  • Earlier this year, Nio and the Hefei government in eastern Anhui province, its new main funder, revealed their intention to be listed on China’s Nasdaq-style board by 2025.
  • The company then declined to comment, Chinese media reported.

Details: Nio has signed “final agreements” for a RMB 7 billion ($ 990 million) financing project with strategic investors including Hefei City Construction and Investment Holding (Group) Co., Ltd., State Development & Investment Corp ., Ltd and Anhui Provincial Emerging Industry Investment Co., Ltd.

  • The investment represents a 24.1% stake in the “Nio China” joint venture.
  • Nio will set up Nio China in the economic and technological development zone of Hefei with the group of strategic investors for the injection of liquidity
  • The rest of the shares will be taken by Nio at RMB 4.26 billion, alongside the injection of its core business and assets into the new entity, including car development and production, supply chain and the Nio Power charging service, valued at RMB 17.77 billion.
  • The company expects to close the deal in the second quarter of this year.
  • A combined first installment of 4.8 billion RMB will be paid into the account within five business days of its closure.
  • Nio’s stock prices climbed 16.2% to $ 3.9 before trading on Wednesday as of this release.

The context: Nio and the Hefei government signed a framework agreement at the end of February for an expected financing plan of RMB 10 billion. This happened at the same time the company started production of its third EC6 electric SUV model, targeting Tesla Model Y, at its joint plant with JAC Motors in Hefei.

  • Nio, backed by Tencent, has had a bumpy funding road over the past year, making no progress on a 10 billion RMB investment plan revealed in May with E-Town Capital, an entity of the company. Beijing municipal government investment.
  • The company has raised a total of $ 435 million via convertible notes from four Asia-based investment funds since the start of this year, as well as two convertible bond financing rounds totaling $ 850 million from major donors, including Tencent last year.

Jill Shen is a Shanghai-based technology journalist. It covers Chinese mobility, autonomous vehicles and electric cars. Connect with her via email: jill.shen@technode.com or Twitter: @yushan_shen More by Jill Shen

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