NIO and Geely have reached cooperation on battery swapping and charging, with cross-shareholding arrangement in the energy business: NIO Energy is valued at 16 billion yuan.
Geely injects its battery swapping assets into NIO Energy, while NIO takes a stake in Geely's charging business in return.
According to IPO Early Post, on September 28, NIO Group (NIO.US; 9866.HK) and Geely Holding announced that they have entered into a formal agreement for strategic transactions in battery swapping and charging businesses. A two-way investment relationship has thus been formed between the energy businesses of the two parties, Geely will inject its battery swapping asset Yiyi Internet into NIO Energy and hold 30% equity of the latter; NIO will hold 10% equity of Haohan Energy, the main operating entity of Geely's charging business.
Pursuant to the agreement, a subsidiary of Geely Holding will subscribe for the newly issued equity of NIO Energy Investment (Hubei) Co., Ltd. with 100% equity it holds in Yiyi Internet Technology (Chongqing) Co., Ltd., plus RMB 640 million in cash as consideration. Yiyi Internet is a subsidiary under Geely Holding that mainly provides battery swapping services for the commercial vehicle market.
Upon completion of the transaction, the Geely Holding subsidiary will hold 30% equity of NIO Energy, NIO China will continue to hold a controlling stake of 63.6%, and the existing investor Wuhan Guangchuang Emerging Technology Phase I Venture Capital Fund will hold the remaining 6.4% equity. The post-money valuation of NIO Energy corresponding to this transaction is approximately RMB 16 billion.
It is worth noting that the 30% equity held by Geely is also linked to the subsequent operational milestones of NIO Energy. If the relevant operating performance fails to meet expectations, its shareholding ratio may be reduced, but will not be lower than 20%.
Meanwhile, Geely has obtained an option to further increase its stake in NIO Energy. Within two years after the closing of this transaction, or before NIO Energy enters into a binding agreement for a new round of financing, whichever comes earlier, Geely may invest an additional RMB 640 million in cash in NIO Energy. If the post-closing equity adjustment is not taken into account, its shareholding ratio will further rise to 34% by then, and NIO China's shareholding ratio will drop to 60%.
While Geely takes a stake in NIO Energy with its battery swapping assets and cash, NIO will also enter Geely's charging business. Pursuant to the agreement, NIO China will subscribe for the newly issued equity of Zhejiang Haohan Energy Technology Co., Ltd. in cash. Haohan Energy is a subsidiary under Geely Holding that operates the charging business, and NIO's investment will be used by Haohan Energy to purchase part of the charging assets from NIO. After the transaction is completed, NIO China will hold 10% equity of Haohan Energy.
The two parties also plan to extend their cooperation to the vehicle end in the next step. The announcement shows that NIO and Geely have drawn up preliminary plans for the consumer models and mobility service vehicles under Geely Holding's affiliated entities to adopt battery swapping technology and provide related services, but the specific plan remains to be further discussed by all relevant parties.
This transaction also provides a new market-oriented valuation anchor for NIO Energy. The post-money valuation of NIO Energy in this round is approximately RMB 16 billion. In June 2024, Wuhan Guangchuang Fund acquired 10% equity of NIO Energy with RMB 1.5 billion, corresponding to a post-money valuation of RMB 15 billion.
As Geely becomes an important external shareholder and injects its own battery swapping assets into NIO Energy, the business boundary of NIO Energy has further extended from serving NIO's own brand to meeting the battery swapping demands of external automakers.
NIO stated in the announcement that this transaction and cooperation reflect the industry's recognition of its battery swapping technology, network and operational capabilities. The company hopes to further promote the popularization of battery swapping and release the long-term value of the battery swapping business through strategic cooperation with industry participants.
Affected by this positive news, NIO's Hong Kong stock opened higher at HK$28.36 per share in the morning trading on the 28th, with a maximum intraday increase of 3.21% to HK$28.96 per share.
This article is from the WeChat official account "IPO Zaozhidao" (ID: ipozaozhidao), the author is Uncle C, and it is published by 36Kr with authorization.