NIO Inc. (NYSE: NIO) shares rose more than 9% in pre-market trading Monday after the Chinese electric vehicle (EV) maker secured a substantial investment of $2.2 billion from Abu Dhabi government fund CYVN Holdings LLC. This move has further strengthened the ties between NIO and the Middle Eastern investor, expanding CYVN’s stake in the Chinese EV maker to about 20%.
The investment comes through a share subscription agreement between NIO and CYVN, wherein the latter will invest $2.2 billion in cash to subscribe for 294 million newly issued shares of NIO’s class A ordinary shares at $7.50 per share through its affiliate, CYVN Investments RSC Ltd. This agreement builds on the strategic partnership initiated in July when CYVN closed a $738.5 million strategic equity investment in NIO.
The investment transaction is slated to close in the last week of December, subject to customary closing conditions. Both parties are bound by a six-month lock-up arrangement after the closure of the latest transaction.
Upon completion of the December investment transactions, CYVN’s ownership in NIO is expected to reach 20.1% of the total issued and outstanding shares, according to the official statement from NIO.
This increased ownership grants the investor the right to nominate directors to NIO’s board. With a beneficial ownership of not less than 15%, CYVN can nominate two directors, while ownership between 5% and 15% grants the right to nominate one director.
Furthermore, NIO and CYVN, along with its subsidiaries, will continue to collaborate on strategic and technical initiatives in international markets following the closing of the investment transaction in December.
In tandem with this financial development, NIO Inc. (NYSE: NIO) revealed plans to launch its “Firefly” brand in Europe in late 2024. Targeting the middle market, these electric vehicles, priced between $13,000-$26,000, pose a direct challenge to China’s leading EV maker, BYD (OTCMKTS: BYDDF). The Firefly brand will first make its debut in Europe before it is launched in the Chinese market.
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