Resurgent Nio Taps Equity Market To Ease Liquidity Crunch, Finance Progress

Nio Inc – ADR NIO, which has seen a strong post-COVID rebound, has opted to take the equity route to raise capital following a few debt offerings and a strategic investment.

Nio's Equity Offering: The Chinese EV maker announced late Tuesday it has commenced an offering of 60 million ADS shares, with each ADS representing one ordinary share.

The ADSs of the company closed Wednesday's session at $6.68.

The company said the offering was made under its shelf registration statement on Form F-3 filed with the SEC that became effective June 9.

Nio's Use Cases Of Financing: Nio said it intends to use the net proceeds mainly to fund its cash investments in Nio China as well as to meet working capital needs.

In late April, Nio signed definitive agreements with a group of strategic investors regarding a 7-billion-yuan ($989 million) injection into Nio China. At that time, the company said as part of the agreement it will transfer its core businesses and assets into Nio China and also invest 4.26 billion yuan in cash into Nio China.

Nio China in turn will use the cash for R&D of products, services and technology, development of its manufacturing facilities and rollout of its supply chain, operation and development of its sales and service network and general business support purpose.

Ahead Of The investments: Nio had raised $335 million in 2020 through private placements alone in a bid to beef up its dwindling cash reserves that stood at $338.6 million at the end of the first quarter.

Fundamentally, things are looking up for Nio, with the company's deliveries rebounding nicely from a COVID-induced slump in February.

After advancing about 68% since the start of June, Nio ADSs are cooling off in the wake of the proposed equity offering. Nio ADSs were slipping 3.4% to $6.44 at time of publication.

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Photo courtesy of Nio.