GAC Group says report about its $1 billion investment in NIO is untrue

Shanghai (Gasgoo)- A report saying Chinese state-owned automaker GAC Group is seeking to raise around $1 billion for future investment in startup NIO went viral on January 15. NIO said afterwards the fact about its financing program should be in accordance with the public company's announcement, while GAC Group stated “the report is untrue” through a formal announcement released on January 16.

The Guangzhou-based automaker said both parties have had discussions about NIO's financing plan, while the talks are still in early stage, and no binding agreement has been reached yet. There is great uncertainty on whether any agreement will be reached.

GAC's subsidiaries might invest as much as $150 million in NIO with their own funds, the state-run automaker said under an assumption that it will be involved in NIO's fundraising program in the future. Nevertheless, the value is limited and won't produce significant effects on GAC's business.

Inspired by the unconfirmed news, NIO closed its business at $4.29 on Wednesday, a surge of 14.1% from opening.

NIO announced on September 5 it would issue and sell convertible notes in an aggregate principal amount of US$200 million to the investors through a private placement. The investors involved in the latest notes issuance are an affiliate of Tencent and Li Bin, chairman and CEO of NIO. The transaction had been almost complete, while Tencent's portion was already shown in the financial results for Q3 2019, NIO's Chief Financial Officer Feng Wei said on Dec. 30, 2019.

GAC Group and NIO co-form a joint venture, dubbed GAC NIO New Energy Automotive Co.,Ltd, which is the operator of the BEV brand “HYCAN”, and has launched the first mass-produced model “HYCAN 007” at the end of 2019.