In an attempt to revitalize the struggling Evergrande Auto, a Middle Eastern capital entity has become the center of attention after announcing a $500 million infusion. On the night of August 14, Evergrande New Energy Auto (Evergrande Auto) disclosed that it received a strategic investment of approximately $500 million from Dubai-based Newton Group (NWTN).
Significant Stake and Collaboration
According to the share subscription agreement, Newton Group is set to acquire about 27.50% of the total issued common shares of Evergrande Auto after capital expansion. The anticipated deal is projected to close in the fourth quarter of this year. Newton also plans to aid Evergrande Auto in expanding its international presence, with an annual goal of exporting 30,000 to 50,000 vehicles to the Middle Eastern market.
Surprising Background and Chinese Ties
Official records indicate that Newton Group, which went public on NASDAQ in November 2022, owns a vehicle assembly plant in Abu Dhabi. It's the first UAE-based new energy company to list in the U.S.
Yet, the Newton Group's connections to China are deeply intertwined. Its Chairman and CEO, a Zhejiang-born businessman named Wu Nan, born in 1982, and many senior executives, including the CTO, are believed to be Chinese. Tracing back, Newton Group's predecessor was ICONIQ, a burgeoning automaker based in Tianjin.
Wu Nan, during an interview, stated that he entered the automotive industry in 2012. By 2014, he started planning ICONIQ with W MOTORS founder Ralph Debbas, introducing ICONIQ to the Chinese market the next year.
Records show ICONIQ's first angel investment round took place in November 2016, backed by Jinsha River Capital. Subsequent rounds saw investments from other capital firms, such as Yinghe Capital and Pro Capital. In July 2019, after an increase in registered capital by 50 million yuan, Tianjin ICONIQ New Energy Automobile Co., Ltd. was renamed Tianjin Tianqi Group Co., Ltd.
Around that time, ICONIQ, in collaboration with Jinghai District Government in Tianjin and Tianjin Baili Mechanical Equipment Group Co., Ltd., secured vehicle manufacturing qualifications post the renaming. ICONIQ even launched a new concept car model at the Shanghai Auto Show that year. However, mass production and subsequent updates weren't smooth, leading to the brand fading from the limelight. A turning point came in September 2021 when Bloomberg reported that ICONIQ might go public in the U.S. by the end of the year with a valuation of around $4 billion.
In June the following year, Newton announced its headquarters' relocation to the UAE, rebranding from ICONIQ to Newton. With substantial support from Middle Eastern governments and capital, it became the first in Abu Dhabi to obtain a new energy vehicle production license and received investments from the UAE royal family's fund. Ultimately, the Newton Group made its NASDAQ debut in November 2022 through a SPAC, currently controlled by the UAE Royal Group.
Interestingly, post-renaming, Newton Group made substantial investments in China. In September of the previous year, Newton China declared a multi-billion yuan investment to construct a new energy vehicle super-factory in Jinhua, Zhejiang Province. This factory, covering over 700 acres, aims to produce 100,000 sets annually by 2024. On the same day, the unveiling of Newton's Greater China headquarters marked the official establishment of an organization with research, production, sales, and operation functions.
This March, Newton Group stated that the Jinhua factory construction was rapidly advancing. Most of the workshop infrastructure, including stamping, welding, and painting, is nearing completion, with the entire project expected to be finished in the latter half of this year.
Financial Questions Arise
However, despite these significant investments, financial reports suggest that Newton might not have enough funds to offer a $500 million investment to Evergrande Auto. As of the end of last year, Newton had cash and cash equivalents of approximately $212 million, with total liabilities reaching $71.97 million. Annual reports from the past three years further reveal that Newton has had no revenue for three consecutive years, with yearly losses expanding.
