EV Maker NIO to Spend $850M to Purchase 3.305% of Subsidiary
Leading Chinese electric vehicle manufacturer NIO Inc. said on Feb. 4 that it will spend 5.5 billion yuan (approximately $850 million) to purchase 3.305% of its subsidiary entity NIO China from two investors.
Upon the completion of the deal, the company will hold an aggregate of 90.36% controlling equity interests in the Hefei-based NIO China.
The EV company had put all of its domestic assets into a legal entity named NIO China and holds 75.9% of the subsidiary’s stakes. The remaining 24.1% of its shares belong to other new investors.
As the COVID-19 outbreak hammered the EV maker, its cash back in 2020 was nearly burnt out, and the NYSE-listed firm’s stock plummeted to $2.4 per share last April.
But in the same month, the company saw light at the end of the tunnel as it reached a deal with the economic development authorities in Anhui, a province located in the eastern part of China whose capital city is Hefei.
The government proposed to invest around $1 billion in the company, and in exchange, NIO will hand over some equity and relocate its headquarters to Hefei.
In July 2020, NIO’s U.S. stock spiked to a new high of $3.18 per share and the price, generally speaking, kept climbing in the following months, up until its peak of $61.95 on Jan. 22 this year.
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Despite the investment in research and development and the purchase of 3.305% of NIO China to attract more investors, the company is also putting 10 billion yuan (about $1.55 billion) into its subsidiary for some newly issued shares.
As of press time, NIO’s stock was $57.6, and the intra-day high was $59.2.