NIO has agreed to redeem 8.6 percent equity interests in NIO (Anhui) Holding Co., Ltd., the legal entity of NIO China, according to an SEC filing.
In April 2020, NIO entered into definitive agreements with a group of investors in Hefei in connection with the strategic investments into NIO China.
Under these definitive agreements, before NIO Anhui is converted into a company limited by shares for the purpose of its qualified IPO, NIO and its designated parties have the right to redeem 50% of the equity interests in NIO Anhui held by the Jianheng New Energy Fund, one of the Hefei Strategic Investors.
On September 16, 2020, NIO Nextev Limited, on behalf of NIO, entered into a share transfer agreement with Jianheng New Energy Fund, pursuant to which NIO Nextev will redeem from Jianheng New Energy Fund 50% of the equity interests in NIO Anhui currently held by the Jianheng New Energy Fund, which accounts for 8.6% equity interests in NIO Anhui, NIO said in the filing.
The total consideration of the redemption will be RMB511.5 million, consisting of the actual capital increase payment Jianheng New Energy Fund has made plus prorated interest accrued at an interest rate of 10 percent per annum, the document showed.
The move comes after the Chinese EV maker issued an additional 88.5 million shares last month to raise $1.7 billion.
On August 31, NIO boosted its additional share issuance by 18 percent as investors rush to buy stocks by electric vehicle makers including Tesla, Xpeng Motors, and Li Auto.
NIO initially planned to sell 75 million shares but then decided to expand the size of the offering to 88.5 million shares.
These shares were offered at $17 and raised more than $1.7 billion in total financing, making it the largest issuance in China's high-end smart electric vehicle industry.
The amount raised by NIO will primarily be used to increase its shareholding in NIO China, exercise NIO China's share repurchase rights, research and development of automated driving technology, and global market expansion, the company said at that time.
NIO's second-quarter financial results show that as of June 30, 2020, NIO's cash reserves totaled RMB 11.16 billion.
On July 10, NIO China received 10.4 billion yuan in comprehensive credit from six major banks. After the issuance, NIO's current cash reserves will exceed RMB 20 billion.
NIO shares went up by more than 3 percent in pre-market trading on Friday.