NIO China HQ Signing — Who Was Happier Than Anhui and Hefei?

On Apr 29, NIO officially announced that it signed the final agreement on investment in NIO China with Hefei City Construction Investment Holding, SDIC-Merchant and Anhui High-Tech Industrial Investment, as well as another agreement on NIO China HQ entering Hefei Economic and Technology Development Zone.

Based on the agreement, strategic investors shall invest RMB 7 B into NIO China, while NIO shall inject Chinese based core businesses and related assets into NIO (Anhui) Co. Ltd, a legal subject of NIO China, including vehicle R&D, supply chain and manufacturing, sales and services, energy services. These businesses and assets are estimated at RMB 17.7 B, based on 85% of average NIO market value during 30 days of public transactions prior Apr 21, 2020.

Further, NIO shall invest RMB 4.26 B into NIO China. Upon transaction, NIO shall own 75.9% controlling stake in NIO China and strategic investors shall hold 24.1% share.

Corporate information websites reveal that Hefei Construction Investment is a solely state owned LLC, with Hefei State Asset Management Commission as its investor. This company participated in many Hefei City investments, including EV charging infrastructure in the city, Golden Sun Energy, GEC and other new energy companies.

Anhui High-Tech Industrial Investment is Anhui Investment Group (controlled by Anhui State Asset Management Commission) wholly owned subsidiary. It invested in CETC, Maiyou Tech and other early stage strategic financings in emerging technologies.

When the news on NIO investment came out, the analysts pointed out that two investors were local state owned industrial investment companies from Anhui and Hefei, which only confirmed earlier content of the framework agreement on strategic investment. The only thing that made everybody surprised was SDIC-Merchant Investment Management.

SDIC-Merchant Investment Management was established by SDIC Fund and Merchant Capital as a management institution specialized in private equity. SDIC-Merchant, as a general partner, is in charge of operation and management of Beijing-Tianjin-Hebei (JingJinJi Area) Coordinated Industrial Development Fund. The first phase of the fund was RMB 10 B. The fund was established using limited partnership structure and is independently running based on market principles.

Based on company official information, actual controller of SDIC-Merchant is State-owned Assets Supervision and Administration Commission of the State Council, which shareholders include SDIC, Merchant Bank, Changzhou Xingyu Auto Light’s subsidiary Xingyu Investment, BYD, Haier Tech and other investment management organizations. SDIC Merchant made strategic investment in TransThera and was an angel investor in SD Super Alloys. Current SDIC-Merchant CEO is Gao Guohua.

Records show that Gao Guohua received automotive engineering PhD from University of Science and Technology Beijing, EMBA from China Europe International Business School and automotive engineering BA from University of Science and Technology Beijing. Previously, he worked as CEO in XCMG, Changchun FAWAY, Zhejiang Medicine and Xingyu.

Our sources said that SDIC-Merchant has always been enthusiastic about investing in automobiles. It invested in Xingyu, Yapp Automotive Parts, BYD, CATL, Semcorp, Kelong New Energy, Wanfeng Tech and Feishi Motor. Investment in NIO only continued the tradition of investments in the automotive industry

So far, media did not reveal each party’s share in RMB 7B investment, which caused a lot of speculation. Some analysts say that based on investment inclination, Anhui and Hefei funds’ actions are government planned, and SDIC-Merchant investment inclination is stronger compared to Anhui and Hefei funds.

Reactions upon signing the agreement seem to prove this conclusion. Virtually at the same time when the agreement was signed, SDIC-Merchant published the news on the agreement and said: “SDIC-Merchant will use its experience gathered through years of investments in automotive industry and help the company increase operative efficiency and R&D level as well as innovation of products and services in order to strengthen its core competitiveness. At the same time, SDIC-Merchant will actively drive strategic cooperation between NIO’s core suppliers and innovation partners as to build smart electric vehicle industrial eco-system and help development of China’s smart new energy vehicles”.

By establishing NIO China, we have also opened RMB financing channel. In this manner, NIO’s funds will have more assurance, NIO CEO said after signing ceremony.

Original source: https://mp.weixin.qq.com/s/YtZmYxPYECYVboD_KszL1w
Author: ZHANG Kun
Editor: WANG Xin
English translation/edit: MoneyballR