China’s NIO Capital eyes US$500 million dollar fund for auto investments: sources

November 29, 2017

NioNIO Capital, an investment firm founded by leading Chinese electric vehicle maker NIO, is in talks with prospective investors to raise up to US$500 million in a dollar fund aimed at the country’s auto sector, people with knowledge of the plans said.

The fund, Shanghai-based NIO Capital’s first dollar fund, will complement its onshore investments by focusing on foreign tech start-ups and Chinese firms using overseas structures such as variable-interest entities, the people said.

The move comes as car makers and investors are pumping in billions of dollars into the so-called new energy vehicle sector in China, the world’s biggest auto market, which is preparing to roll out tough norms to promote the sector to fight urban smog and cut dependence on imported oil.

NIO Capital was co-founded last year with Sequoia Capital and Hill house Capital and is in the process of putting its first yuan fund, worth 10 billion yuan (US$1.52 billion), to work – a process it expects to complete in the next two years.

A dollar fund would enable it to spread its investments to entities outside mainland China.

NIO Capital declined to comment on its dollar-based plans.

NIO itself is backed by Asian tech behemoth Tencent Holdings and is due to release its first mass production car – the ES8 pure-electric, seven-seat sport-utility vehicle, next month.

It has also vowed to bring an autonomous electric car to the U.S. market by 2020. [nL8N1NF094]

In an interview separate to the dollar fundraising plans, Ian Zhu, a partner at NIO Capital, said the firm’s aim was to capture several trends changing the auto and energy industries. It was primarily investing in sectors ranging from electric vehicles and battery technologies to new energy and materials, he added.

“These are once-in-a-generation (investment) opportunities,” he said.

Apart from EV and new energy, NIO Capital is looking for opportunities in self-driving technology – another part of China’s national agenda as the country pushes into artificial intelligence in a bid to rival U.S. market leaders such as Google and Microsoft.

“There is a strong demand for self-driving cars. As long as the price is reasonable, people are willing to pay to make cars into autonomous driving vehicles,” Zhu said.

He expected autonomous driving-related business to account for about 20 % of the world’s auto market in the next five to 10 years.

NIO Capital has so far invested between 2 billion and 3 billion yuan (US$303 million to US$455 million) in 15 start-ups. Investments include Momenta, a Beijing-based self-driving start-up and Shouqi Limousine & Chauffeur, a Chinese car-hailing operator.

 

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