A Middle Eastern sovereign fund invested twice this year in the same Chinese automotive company.
On December 18th, NIO announced that it had received a strategic financing of $2.2 billion (approximately RMB 15 billion) from Abu Dhabi investment firm CYVN Holdings.
This is CYVN's second investment in NIO Motors within the year. In July of this year, CYVN completed a strategic investment of approximately $1.1 billion (approximately RMB 7.5 billion) in NIO through targeted issuance of new shares and transfer of old shares. In addition to purchasing stocks from Tencent, CYVN also acquired a 7% stake in NIO.
Affected by this news, NIO Motor (09866. HK) rose more than 5% in intraday trading on the 19th, with its stock price reaching a peak of HKD 65.4 per share. Overnight in the US stock market, NIO Motor also performed outstandingly, rising more than 8% at one point and closing up at 4.76%.
This is not the first recent move by Middle Eastern capital. Since the beginning of this year, several car companies such as Xiling Power, BAIC New Energy, Evergrande Automobile, Great Wall Huaguan, and Geely Automobile have received investments from Middle Eastern capital.
Recently, Nitin Verliani, Vice President of Investment Banking Department of Dubai National Bank, United Arab Emirates, stated in an interview with First Financial reporters that energy transformation is an urgent task for Middle Eastern countries. China has advanced electric vehicle production and manufacturing technology and a huge consumer market. Whether directly investing or attracting joint ventures to build factories, it is beneficial for Middle Eastern funds to share the dividends of China's market development.
15 billion yuan Haotuo NIO Automobile
On December 18th, NIO announced that it had sold 294 million newly issued Class A common shares at a price of $7.50 per share, raising a total cash investment of $2.2 billion from CYVN. The transaction is expected to be completed in the last week of this month. After the completion of the transaction, CYVN will beneficially hold about 20.1% of the total issued and outstanding shares of NIO, becoming the largest single shareholder of NIO Automobile.
At the same time, CYVN will have the right to select two directors for NIO's board of directors. According to the agreement, the nomination is valid as long as CYVN's equity is not less than 15%. If CYVN's shareholding ratio is higher than 5% but lower than 15%, it has the right to nominate a director to the board of directors.
According to NIO's "super voting structure", Li Bin remains the shareholder with the single largest voting rights and the actual controller of NIO, holding control over the company.
Jassem Al Zaabi, Chairman and Managing Director of CYVN, stated that, "Increasing our strategic investment in NIO is in line with our strategy to establish a globally leading investment portfolio in the field of transportation. This investment demonstrates our confidence in NIO's unique positioning and competitiveness in the global intelligent electric vehicle industry. We are pleased to become NIO's long-term strategic partner and support its unremitting efforts in product innovation, technological breakthroughs, and international market expansion."
Middle Eastern Capital Accelerates Layout of New Energy Vehicle Enterprises
Public information shows that CYVN is an investment institution with a majority stake in the Abu Dhabi government of the United Arab Emirates. Investors include Abu Dhabi Investment Authority, Mubadala Investment Company, National Oil Investment Company, Abu Dhabi National Oil Company, and other institutions. Its main operator is the Abu Dhabi Investment Authority, which is the third largest sovereign fund in the world in terms of asset size. Its investment in the Chinese market increased from 4.5% at the end of 2019 to 22.9% in the first quarter of 2023.
The focus of CYVN's layout strategy is on the intelligent transportation industry. The fund was established in 2022 and is committed to investing in global industry leaders in this field, reflecting the Abu Dhabi government's vision of seeking economic diversification.
Under this vision, CYVN actively carries out its layout for new energy electric vehicles. As early as December 2022, CYVN invested $915 million in American electric vehicle manufacturer Lucid Motors, and was promoted to the largest shareholder with a 7% stake; In January 2023, CYVN invested $400 million in Xiaopeng Motors; In the same month, CYVN invested $150 million in British electric vehicle manufacturer Arrival, holding a 3.1% stake in the company. It can be seen that the main way CYVN invests in new energy vehicle companies is by subscribing to stocks.
This year, several Chinese new energy vehicle companies have also cooperated strategically with Middle Eastern capital. In October, Beyonca, a new automotive force, signed an investment and strategic cooperation memorandum with Al Faisaliah Group Holding Company (AFG), an investment group headquartered in Saudi Arabia. In September, autonomous driving solution supplier Hongjing Zhijia received investment from Prosperity 7 Ventures, a Saudi Aramco VC firm.
Since the beginning of this year, car companies such as Xiling Power, BAIC New Energy, Evergrande Automobile, and parent companies of Future Automobile, Great Wall Huaguan and Geely Automobile, have received varying degrees of financing from Middle Eastern capital. The cooperating institutions include Saudi Sovereign Wealth Fund, investment institutions under Saudi Aramco, Newton Group, Saudi Investment Department, etc.
In addition, the cooperation between Middle Eastern capital and domestic new energy vehicle companies also includes attracting joint ventures to build factories. In October this year, Xiaoma Zhixing received an investment of $100 million from the Kingdom of Saudi Arabia's New Future City (NEOM) and its investment fund NIF (NEOM Investment Fund). This round of financing is used for global research and operation investment in autonomous driving technology. Both parties will also establish a joint venture in New Future City to establish an autonomous driving production, manufacturing, and research and development center. At the end of 2022, ENOVATE, a high-end domestic travel technology company, announced that it will establish a joint venture with local Saudi company Sumou Holding to jointly invest about $500 million in two phases in Saudi Arabia and establish a new energy vehicle production and research and development base, with plans to produce 100000 new energy vehicles annually.
Wang Yide said in an interview with First Financial News that Middle Eastern capital has significantly increased China's electric vehicle industry to achieve a win-win situation for both sides. Energy transformation is an urgent task for Middle Eastern countries, aiming to break free from their single dependence on oil in the economy; China has advanced electric vehicle production and manufacturing technology, as well as a huge consumer market. Whether directly investing or attracting joint ventures to build factories, it is beneficial for Middle East funds to share the dividends of China's market development.
As early as 2016, Saudi Arabia launched the "2030 Vision Economy Plan" with the goal of increasing the proportion of renewable energy generation to 50% by 2030; The UAE proposed the "2050 Energy Strategy" in 2017, with the goal of 44% renewable energy, 38% natural gas, 12% clean fossil energy, and 6% nuclear energy in the UAE's energy structure by 2050; In 2021, Saudi Arabia released a five-year strategy for public investment funds, aimed at accelerating the implementation of the 2030 Vision Plan.