Beijing Hyundai secures $942.2 million capital increase from two parent firms

Shanghai (Gasgoo)- BAIC Investment and Hyundai Motor have entered into an agreement to jointly inject capital of around $942.2 million in their joint venture Beijing Hyundai, according to an announcement issued on March 18 by BAIC Motor, the parent of BAIC Investment.

The capital will be evenly poured by both parties. Upon completion of the capital increase, the registered capital of Beijing Hyundai shall be increased to about $2.979 billion. Shareholding of BAIC Investment in Beijing Hyundai shall remain unchanged at 50%.

The capital increase will be executed in two installments, of which the first one shall be completed before July 1, 2022.

Mistra BEV; photo credit: Beijing Hyundai

The transaction is primarily made to strengthen the capital stability of Beijing Hyundai and help the joint venture effectively respond to the demands for further investment amid the electrification trend in China's automotive industry, BAIC Motor stated in the announcement.

Through the capital increase, Beijing Hyundai is expected to improve its working capital level and prevent liquidity risk, and further beef up strategic resource investment in collaboration with shareholders, hence improving its operation and market presence.

Moreover, the transaction is also expected to provide capital protection for the joint venture's new product introduction and expansion of the layouts in new energy vehicle (NEV) sector and export business.

Founded in Oct. 2002 in Beijing, Beijing Hyundai is 50/50 invested by BAIC Investment and Hyundai Motor. Notably, it is the first Sino-foreign joint venture in the field of automobile production approved after China's accession to the WTO.

For the year of 2021, Beijing Hyundai posted an annual net loss after tax of 4.995 billion yuan ($785 million) and recorded total assets of 37.965 billion yuan ($5.965 billion), according to BAIC Motor's announcement.