Middle Eastern capital has smashed gold coins again, intensively sweeping new energy vehicle companies?

A Middle Eastern sovereign wealth fund increased its investment in the same Chinese auto company twice during the year.

On December 18, NIO officially announced that it had received a strategic financing of US$2.2 billion (about 15 billion yuan) from CYVN Holdings (hereinafter referred to as "CYVN"), an Abu Dhabi investment institution.

This is CYVN's second investment in NIO this year. In July this year, CYVN completed a strategic investment of about US$1.1 billion (about 7.5 billion yuan) in NIO through a private placement of new shares and the transfer of old shares, and in addition to buying shares from Tencent, it also acquired a 7% stake in NIO.

Affected by this news, NIO (09866. HK) rose more than 5% intraday on the 19th, with the highest share price of HK$65.4 per share, and in the U.S. stock market overnight, NIO also performed outstandingly, rising more than 8% intraday and closing up 4.76%.

This is not the first recent move by Middle Eastern capital. Since the beginning of this year, many car companies such as Xiling Power, BAIC New Energy, Evergrande Automobile, Great Wall Huaguan, and Geely Automobile have received investment from Middle East capital.

Recently, Nitin Verliani, vice president of the investment banking department of the National Bank of Dubai, United Arab Emirates, said in an interview with the first financial reporter that energy transition is an urgent task for Middle Eastern countries, and China has advanced electric vehicle manufacturing technology and a huge consumer market.

15 billion yuan to invest in NIO

On December 18, NIO announced that it had sold 294 million newly issued Class A common shares at a price of $7.50 per share, raising a total cash investment of $2.2 billion from CYVN. The transaction, which is expected to close in the last week of this month, will give CYVN a beneficial holding of approximately 20.1% of NIO's total issued and outstanding shares, making it the largest single shareholder of NIO.

At the same time, CYVN will have the power to select two directors for NIO's board of directors. According to the agreement, the nomination is valid as long as the CYVN has a minimum stake of 15%. If CYVN holds more than 5% but less than 15% of its shareholding, it has the right to nominate a director to the Board of Directors.

According to NIO's "super voting rights structure", Li Bin is still the shareholder with the single largest voting rights, and is still the actual controller of NIO, with control over the company.

Jassem Al Zaabi, Chairman and Managing Director of CYVN, said, "The increased strategic investment in NIO is in line with our strategy to build a world-leading portfolio in the mobility sector. This investment demonstrates our confidence in NIO's unique positioning and competitiveness in the global smart electric vehicle industry." We are pleased to be a long-term strategic partner of NIO and support its unremitting efforts in product innovation, technological breakthroughs and international market expansion." ”

Middle Eastern capital accelerates the deployment of new energy vehicle companies

According to public information, CYVN is an investment institution with a majority stake owned by the Abu Dhabi government of the United Arab Emirates, and investors include Abu Dhabi Investment Authority, Mubadala Investment Company, National Petroleum Investment Company, Abu Dhabi National Oil Company and other institutions. It is operated by the Abu Dhabi Investment Authority, the world's third-largest sovereign fund, with its share of investment in the Chinese market increasing from 4.5% at the end of 2019 to 22.9% in the first quarter of 2023.

The focus of CYVN's layout strategy is on the smart mobility industry. Launched in 2022, the fund is dedicated to investing in global industry leaders in the sector, reflecting the Abu Dhabi government's vision to diversify its economy.

As early as December 2022, CYVN invested US$915 million in Lucid Motors, a U.S. electric vehicle manufacturer, and became the largest shareholder with a 7% stake, in January 2023, CYVN invested US$400 million in Xpeng Motors, and in the same month, CYVN invested US$150 million in Arrival, a British electric vehicle manufacturer, holding a 3.1% stake in the company. It can be seen that the main way for CYVN to invest in new energy vehicle companies is to subscribe for shares.

During the year, a number of Chinese new energy vehicle companies also entered into strategic cooperation with Middle East capital. In October, BeyonCa, a new EV manufacturer, signed a memorandum of understanding (MOU) with Al Faisaliah Group Holding Company (AFG), an investment group headquartered in Saudi Arabia. In September, autonomous driving solutions provider Grand Vision received an investment from Saudi Aramco's VC arm, Prosperity 7 Ventures.

Since the beginning of this year, Xiling Power, BAIC New Energy, Evergrande Automobile, Great Wall Huaguan, Geely Automobile, the parent company of Qiantu Automobile, and other car companies have received varying degrees of financing from Middle Eastern capital. Partners include Saudi Arabia's sovereign wealth fund, Saudi Aramco's investment institutions, Newton Group, Saudi Ministry of Investment, etc.

In addition, the cooperation between Middle East capital and domestic new energy vehicle companies also includes attracting enterprises to build joint ventures. In October this year, Pony.ai received a $100 million investment from the Kingdom of Saudi Arabia's New Future City (NEOM) and its investment fund NIF (NEOM Investment Fund). This round of financing will be used for global R&D and operational investment in autonomous driving technology. The two companies will also establish a joint venture in the New Future City to establish an autonomous driving manufacturing and R&D center. At the end of 2022, ENOVATE, a domestic high-end mobility technology company, said that it would establish a joint venture with Sumou Holding, a local Saudi company, to jointly invest about US$500 million in two phases in Saudi Arabia and set up a new energy vehicle production and R&D base, with an annual output of 100,000 new energy vehicles.

Wang Yide said in an interview with the first financial reporter that Middle Eastern capital has increased China's electric vehicle industry to achieve a win-win situation for both parties. Energy transition is an urgent task for Middle Eastern countries, which is intended to get rid of the economy's single dependence on oil, and China's advanced electric vehicle manufacturing technology and huge consumer market are conducive to Middle East funds to share the dividends of China's market development, whether it is a direct stake or to attract joint ventures.

As early as 2016, Saudi Arabia launched the "Vision 2030 Economic Plan", aiming to increase the proportion of renewable energy power generation to 50% by 2030, the UAE put forward the "2050 Energy Strategy" in 2017, aiming to 2050, the UAE's energy mix is 44% renewable energy, 38% natural gas, 12% clean fossil energy, and 6% nuclear energy, and in 2021, Saudi Arabia released a five-year strategy for the Public Investment Fund, which is intended to accelerate the promotion Vision 2030 Plan" realized.