Private equity firm Hillhouse sells off its Nio shares
iCrowdNewswire -
Feb 18, 2020 8:30 PM ET
Hillhouse Capital, a longtime Nio investor and once its third-largest shareholder, sold off its holdings in the Chinese electric vehicle (EV) firm in fourth quarter after reducing its stake significantly earlier in the year, according to a filing on Friday.
Why it matters: Caution about the EV maker and about the electric car sector in general from a top-ranked private equity firm underscores the industry’s fragility and as well as the uphill battle Nio still faces in attracting badly needed funding.
Hillhouse also sold off all of its 147,700 Tesla shares at the end of 2019 which it had bought in the second quarter, according to a regulatory filing.
Details: Asia-focused investment firm Hillhouse Capital Management has sold its entire stake in Nio over the last quarter, the company revealed on Friday in a filing made to the US Securities and Exchange Commission (SEC) after market close.
The fund-management company nearly doubled its Nio holdings to 41.9 million shares in Q2 of last year, but reversed and sold off two-thirds in the third quarter, reducing its holdings to 13.36 million shares.
Known for being an early investor in Chinese tech giants Tencent and JD.com, Hillhouse was Nio’s third-largest institutional shareholder with a 6.2% stake in the company behind Tencent and Scottish investment house Baillie Gifford, Nio wrote in its annual report released in April 2019.
The investment firm was an early Nio backer, leading its $100 million Series A in 2015 with a follow-on investment in the EV firm’s $600 million Series C two years later. It held 7.5% of its shares as a principal shareholder when Nio went public in the US in September 2018.
Nio’s share price reached its lowest point of $1.19 in the beginning of October and remained depressed for most of the quarter. Shares shot up by more than 53% to $4.87 on Dec. 30 after the EV maker posted smaller-than-expected quarterly losses.
A Nio executive told Chinese media that the company respects investor choices, and declined to comment further. Hillhouse did not respond to TechNode’s request for comment.
Hillhouse held 210 million shares worth $8 billion by year-end from 54 companies including Chinese e-commerce giant Alibaba, video-streaming platform iQiyi, and video-conferencing firm Zoom, according to filings.
Context: Hillhouse’s filing follows a day after Nio announced another $100 million short-term debt offering in convertible bonds from two unnamed Asia-based investment funds, which is expected to close on Feb. 19. The company had just announced a similar deal to raise $100 million just a week earlier, on Feb. 6.
Nio’s stock price dropped 6.5% to $3.77 on Friday amid lingering concerns over whether it will be able to raise new financing in amounts significant enough to sustain growth.