FAST NEWS: Abu Dhabi government takes 7% stake in Nio Inc.

The latest: New energy vehicle maker Nio Inc. (NIO.US; 9866.HK) announced Tuesday that it has entered into a share subscription agreement with CYVN Holdings to issue 8.469 million Class A ordinary shares at a price of $8.72 per share, for a total investment of $738.5 million.

Looking up: CYVN Holdings is an investment vehicle majority owned by the Abu Dhabi Government strategically focused on advanced and smart mobility, it is expected that its shareholding will help Nio to develop its international business.

Take Note: Nio’s second largest shareholder Tencent (0700.HK) also took the opportunity to reduce its shareholding in the company by selling 40.1 million Class A ordinary shares to CYVN Holdings. As a result, CYVN will hold a total of approximately 7% of the shares of Nio after the transaction is completed.

Digging Deeper: Founded in 2014, Nio is one of China’s best-known manufacturers of new energy vehicles, and like its peers, this group of companies is hoping to profit from the official push for clean energy vehicles. But although its revenue has been rising in recent years, it has not been able to shake off its chronic losses, which have exceeded 30.7 billion yuan ($4.27 billion) in the past alone. To add insult to injury, Nio also joined the price war last week in response to the slowdown in sales growth over the past two months in the face of price cuts by major car makers, which will likely have a negative impact on its gross margin.

Market Reaction: Nio shares rose on Wednesday and closed up 5.2% at HK$74.2 by the midday break. The stock now trades near the lower end of its 52-week range.

Translation by Jony Ho

To subscribe to Bamboo Works free weekly newsletter, click here