NIO Gets Equity Lifeline from Hefei Government

Posted on 04/29/2020

Chinese electric vehicle maker NIO Inc. got a lifeline. NIO (Anhui) Holding Ltd. is the legal entity of NIO China. NIO will inject its core businesses and assets in China, including vehicle research and development, supply chain, sales and services and NIO Power (the “Asset Consideration”), into NIO China. The Asset Consideration is valued at 17.77 billion yuan, as calculated based on 85% of the average market value of NIO Inc. over the thirty public trading days preceding April 21, 2020. Further, NIO will invest 4.26 billion yuan in cash into NIO China.

The strategic investor are investing 7 billion yuan ($1 billion) in NIO China. This investor group is led by Hefei City Construction and Investment Holding (Group) Co., Ltd. Other investors in the group include CMG-SDIC Capital Co., Ltd. and Anhui Provincial Emerging Industry Investment Co., Ltd.

Upon the completion of the investments, NIO will hold 75.9% of controlling equity interests in NIO China, and the new strategic investors will collectively hold the remaining 24.1%. NIO expects the closing of the investments to take place in the second quarter of 2020, subject to the satisfaction of customary closing conditions.

Five Installments

According to the filing, “The strategic investors and NIO will each inject cash into NIO China in five installments, namely (i) RMB3.5 billion and RMB1.278 billion respectively within five business days of the satisfaction of closing conditions, (ii) RMB1.5 billion and RMB1.278 billion respectively on or prior to June 30, 2020, (iii) RMB1 billion and RMB0.852 billion respectively on or prior to September 30, 2020, (iv) RMB0.5 billion and RMB0.426 billion respectively on or prior to December 31, 2020, and (v) RMB0.5 billion and RMB0.426 billion respectively on or prior to March 31, 2021. Moreover, the Asset Consideration shall be injected into NIO China within one year of closing.”

In addition, NIO China will establish its headquarters in the Hefei Economic and Technological Development Area (HETA), where NIO’s main manufacturing hub is located, for its business operation, research and development, sales and services, supply chain and manufacturing functions. NIO will collaborate with the strategic investors and HETA to develop NIO China’s business and to support the accelerated development of the smart electric vehicle sectors in Hefei in the future.