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Nio to raise over USD 344 million by offering 60 million ADSs amid tight liquidity

Existing investor Tencent will secure 2.8% of Nio’s ADS for about USD 10 million.

Chinese electric vehicle maker Nio (NYSE: NIO) announced on Monday the offering of 60 million American depositary shares (ADSs) to raise about USD 344.2 million, in a move to fund its cash investments in Nio China and to replenish its working capital, according to a company’s filing with the US Securities and Exchange Commission (SEC).

Tencent, Nio’s existing shareholder, has indicated an interest in subscribing for up to USD 10 million worth of the ADSs in this offering, according to Nio.

The Shanghai-headquartered startup also disclosed in the filing that, prior to the offering, the firm’s “working capital and liquidity was not adequate for continuous operation in the 12 months from the date of this prospectus supplement,” adding that continuous operation will depend on the company’s capability to obtain sufficient external equity or debt financing.

On April 29, Nio agreed to set up Nio China in a USD one billion deal with a slew of Hebei-based strategic investors led by Hefei City Construction and Investment Holding, CMG-SDIC Capital, and Anhui Provincial Emerging Industry Investment. As part of the agreement, Nio will set up its headquarters for China operations in Hefei’s economic and technological development area.

Nio will inject its core businesses and assets in China, valued at RMB 17.77 billion in total, including vehicle research and development, supply chain, sales and services, and the firm’s spin-off charging solution unit Nio Power, into Nio China, said the company. Additionally, Nio will invest RMB 4.26 billion (USD 600 million), while the Hefei-based investors will pour RMB 7 billion (USD 1 billion) into Nio China.

Upon the completion of the investments, Nio will hold 75.9% of controlling equity interests in Nio China, while the group formed by Hefei investors will collectively hold the remaining 24.1%.