China's largest domestic car maker, Geely Automobile, is planning to invest in Nio. If things go as planned, the news will be announced in the near future.
Geely plans to invest about $300 million, which will account for less than 10% of Nio's shares, and is expected to become Nio's third largest shareholder, said a WeChat account focusing on the automotive industry.
Due to the overall shares held by co-founders including Li Bin, even if Geely shares surpassed Li Bin to become the largest shareholder, Geely still did not have the controling right in Nio. However, this move is believed to be Geely's decision to "buy the future."
In respond to the report, Yang Xueliang, vice president of Geely, said, "I don't know about it, and I don't comment on market rumors." Nio also said it cannot comment.
Nio shares was down 6.45 percent on Friday. The U.S market was closed due to public holiday on Monday.
The dilemma of Nio's capital stress is already an open secret in the industry. Because of the inability to meet the higher capacity payment requirements of suppliers, Nio could not produce more products to meet the market even if there was a market.
Nio, already facing trouble, had to face the outbreak of coronavirus pneumonia at this time.
The company should have made payments of wages on February 8 this year, did not pay as scheduled.
Due to the impact of the epidemic, the return to work has been delayed, which has brought about changes in the company's management structure, so Nio's payroll date has changed.
Nio said employees can choose to get salary within the corresponding amount, or take the company's stock.
At the same time, Nio's financing is in full swing. Nio's founder Li Bin has been looking for funds in many ways. GAC Group was considering investing in Nio to solve Nio's struggling financial problems. However, as a state-owned enterprise, GAC was subject to restrictions and various procedures, even if the Determined, the operation is not so fast and smooth.
After the New Year, on February 6, Nio has issued two convertible bonds worth a total of $100 million and $30 million.
Then, a week later, Nio signed a convertible bond subscription agreement with two Asian investment funds that had no relationship with them.
The agreement shows that Nio will issue and sell convertible bonds with a total principal amount of US $100 million to non-public issuance, which is expected to be completed by February 19 this year.
However, for Nio, this funding is obviously a slap in the bucket. Nio must have at least sufficient funds to support the next new product to the market. It is reported that Nio needs about $1 billion.
Although even with Geely's financing, it currently has not reached 1 billion U.S. dollars, but with the entry of mainstream domestic car companies, it will further stimulate investor confidence, which can be said to play a role in attracting investment in the capital market.
It is worth noting that, just when Geely was about to invest in Nio, Nio's third-largest shareholder, Hillhouse Capital, chose to clear Nio.
However, investors are not worried about this: "Different types of capital have different investment values.
And the exit of Hillhouse Capital is nothing more than a sign that Nio has entered the era of industrial capital from the era of venture capital. "