NIO Inc., otherwise known as the "company," announced its entry to the Chinese market. The pioneer in the country's premium smart electric vehicle market would enter into definitive agreements for investments into its China conglomerate along with a group of investors.
This Wednesday, pioneer premium smart electric vehicle company NIO Inc. announced that it would enter into definitive agreements for investments in its Chinese conglomerate along with investors such as Hefei City Construction and Investment Holding, Co., Ltd., Anhui Provincial Emerging Industry Investment Co., Ltd., and CMG-SDIC Capital Co.
The strategic investors would inject an aggregate of seven billion RMB into NIO Holding Ltd., the company's conglomerate in China. NIO, on the other hand, would inject its core businesses and assets in the country, including its vehicle research and development, sales and services, supply chain, and NIO power.
The value of the agreement's asset consideration is at 17.77 billion RMB based on an 85 percent average market value of NIO Inc. 30 days before April 21, 2020. NIO would also invest 4.26 billion RMB of cash into its Chinese conglomerate. Once the investments push through, NIO would earn 74.9 percent of controlling equity interests in the Chinese conglomerate while the strategic investors would collectively hold only 24.1 percent of NIO China.
The closing of the agreements for NIO China would end by the second quarter of 2020, depending on the customary closing conditions in the country. The strategic investors and NIO would inject the cash in five installments.
- The first installment would be at 3.5 billion RMB and 1.278 billion RMB, respectively, within five business days of the closing;
- The second installment would be one billion RMB and 0.852 billion RMB, respectively, before June 30, 2020;
- The third installment is at one billion RMB and 0.852 billion RMB, respectively, on or before September 30, 2020;
- The fourth installment would bring another 0.5 billion RMB and 0.426 billion RMB, respectively, before December 31, 2021; and
- Finally, the fifth installment would be at 0.5 billion RMB and 0.426 billion RMB, respectively, on or before March 31, 2021.
The asset consideration, on the other hand, would be injected into the Chinese conglomerate within one year from the closing of the deal.
The headquarters of the project would be within Hefei Economic and Technological Development Area (HETA), where NIO Inc.'s leading manufacturing hub is located. It was perceived as the most feasible location since it is where business operations, research development, supply chain, manufacturing, and sales and services occur.
The investment was considered as a substantial potential for NIO's long-term growth goals. It would enable NIO to acquire sufficient funds to support its business development plans, leadership functions in product and technology of smart vehicles, and exceed its customer base satisfaction.
