Abu Dhabi-backed firm to invest $740 million in Chinese EV maker Nio

Historically built around oil, mutual investments between China and the United Arabs Emirate today flourishes in various non-oil economic and commercial sectors such as infrastructure, sustainable energy, finance, and fintech.

This Arab-China partnership has since continued on a growth incline, with bilateral trade between the two countries projected to grow to USD 200 billion in 2030, up from USD 50 billion in 2021, according to Emirates News Agency.

And while other Gulf countries share the same geographical advantages, the UAE is working hard to distinguish itself by increasing its bets on China's technology sector.

In March, Abu Dhabi-based artificial intelligence firm G42 bought a $100+ million stake in ByteDance, valuing the TikTok owner at $220 billion. In the same month Mubadala, a sovereign investor owned by the government of Abu Dhabi, and 42XFund an Abu Dhabi headquartered technology investment manager, co-led a $300+ million investment in China's JD Industrial. In the month following, April, Mubadala co-led another $300+ million investment in Chinese pharmaceutical company Hasten Biopharma, while in May, it led a $2 billion round in Chinese fast fashion company, Shein.

Now in June, CYVN Holdings, a company backed by the Abu Dhabi government, is planning to invest about $738.5 million in Chinese electric vehicle maker Nio Inc.

Upon closing of both deals, CYVN will own a 7% stake in Nio which will entitle the investment company to nominate one director to Nio's board. CYVN has also entered into a deal with an affiliate of Tencent Holdings, under which it will pick up some shares of Nio.

The fund will be used to bolster the Chinese automaker's balance sheet at a time when it faces a bruising price war with competitors in the industry. This is because the company had to succumb to the industry-wide trend of cutting EV prices which saw its cash equivalents fall to 14.76 billion yuan ($2.06 billion) in the first three months of 2023 from 19.89 billion yuan ($2.77 billion) at the end of the fourth quarter of 2022.

It also plans to pursue global business opportunities jointly with CYVN following the closing of the investment deal. This will help it compete in the domestic EV market with market leaders BYD, Xpeng and Li Auto, also against Tesla, the runaway leader in the premium EV segment in mainland China, the world’s largest automotive and electric-car market.