Shares of Chinese electric vehicle (EV) company Nio (NYSE:NIO) are in full focus following Tencent’s (OTCMKTS:TCEHY) submission of an amended Schedule 13D. The filing showed that Tencent and its subsidiaries owned a total of 124.11 million shares of June 20, equivalent to an 8% ownership stake. Tencent last reported ownership of 164.24 million shares, which means that it reduced its position by 40.13 million shares, or by 24.44%.

Tencent’s reduction in NIO stock is directly correlated to a deal with CYVN Holdings. Abu Dhabi’s government owns a majority stake in the investment firm. Tencent’s filing reads:

“On June 20, 2023, Image Frame as the seller entered into a stock purchase agreement (the “June 2023 Stock Purchase Agreement”) with CYVN Holdings L.L.C., as the purchaser, to sell 40,137,614 Class A Ordinary Shares of the Issuer to the purchaser for an aggregate consideration of US$350 million. The transfer was completed on June 23, 2023.”

NIO Stock: Tencent Cuts Stake Through Deal With CYVN Holdings

Tencent is the parent company of Image Frame. Last week, it was announced that CYVN would enter into a share subscription agreement with Nio. The agreement states that CYVN will invest $738.5 million into the EV company in exchange for 84.69 million newly issued shares priced at $8.72 apiece. At the same time, CYVN also agreed to enter into a 40.13 million share purchase agreement with Image Frame. After completing the $738.5 million investment and share purchase agreement with Image Frame, CYVN will own about 7% of NIO stock issued and outstanding.

“Our strategic investments in NIO are driven by our appreciation of its leading brand, innovative and premium products, and proven technological capabilities in the smart electric vehicle market,” said CYVN Chairman and Managing Director Jassem Al Zaabi. “We are excited to develop strategic partnerships with NIO, and are fully committed to providing strategic value that will support NIO’s international business growth.”

Nio has also granted CYVN the power to nominate one director to its board as long as CYVN’s stake in Nio exceeds 5%. Additionally, CYVN has agreed to help Nio with its international EV sales.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.