Shares of Nio (NYSE:NIO) stock are in the green after the Chinese electric vehicle (EV) company confirmed the closing of a $738.5 million investment from CYVN Investments. CYVN Investments is an affiliate of CYVN Holdings, which in turn is majority-owned by Abu Dhabi’s government. In exchange for the $738.5 million, CYVN received 84.69 million shares of newly issued Class A shares at a price of $8.72 per share. As part of the deal, CYVN has agreed not to sell, transfer, or dispose of any of the shares received in the agreement for at least six months following the closing.
“The strategic investments from CYVN Holdings demonstrate NIO’s unique values in the smart electric vehicle industry,” said Nio CEO William Bin Li. “The Investment Transaction will further strengthen our balance sheet to power our continuous endeavors in accelerating business growth, driving technological innovations and building long-term competitiveness.”
CYVN Closes $738 Million NIO Stock Investment
In addition to the investment, CYVN also acquired 40.13 million shares of NIO from Image Frame, a Tencent (OTCMKTS:TCEHY) affiliate, through a stock purchase agreement. The shares, worth about $350 million, cut Tencent’s position to 124.11 million shares, which is equivalent to an 8% ownership stake. Following the completion of both investments, CYVN now owns a 7% ownership stake in Nio.
In addition, Nio has granted CYVN permission to nominate one director to its board as long as CYVN’s outstanding share capital stake is 5% or greater. On top of that, CYVN and Nio have agreed to work together to “pursue strategic collaborations in international business and technology cooperation.”
Nio recently reported its June deliveries, which were somewhat disappointing. During the month, deliveries totaled 10,707 vehicles, down by about 17% year-over-year (YOY) compared to 12,961 deliveries. For the three months ended June 30, deliveries totaled 23,520, down by 6% YOY compared to 25,059 deliveries. At the same time, investors have largely cast aside the slowdown in growth, as NIO is up by about 10% since the delivery announcement on July 1. Meanwhile, Nio has begun the process of ramping up deliveries of its ET5 Touring and new ES8 SUV, which may be driving the price appreciation of NIO.
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.
