Shares of China Evergrande New Energy Vehicle Group experienced a significant boost early on Tuesday following a strategic investment from Dubai-based company NWTN. NWTN has agreed to invest a staggering $500 million, causing shares to rise by 14% and reach HK$1.94 ($0.25), after reaching as high as HK$2.50 earlier. This investment comes as a much-needed lifeline for China Evergrande, which had its electric-vehicle unit suspended since April 2022 due to a debt crisis.
NWTN’s strategic investment will involve the acquisition of about 27.5% of the enlarged issued ordinary shares of Evergrande NEV, aiming to expedite the company’s development in the EV space. As a result of this deal, China Evergrande’s stake in Evergrande NEV will decrease to 46.9%. Furthermore, to support its recovery efforts, NWTN (Zhejiang) Automobile and Evergrande New Energy Vehicle (Tianjin) have struck a support deal for 600 million yuan ($82.7 million). The funds from this agreement will be utilized for research, development, manufacturing, and sales services of vehicles.
In addition to the strategic investment, Evergrande NEV plans to issue new shares as part of its debt-restructuring plan and ease the loan burden of China Evergrande. These new shares amount to 5.44 billion and will be sold at HK$3.84 each, resulting in a total value of HK$20.89 billion.
Overall, the partnership with NWTN and the issuance of new shares signify a positive development for China Evergrande NEV. This collaboration will facilitate a path towards recovery and expansion in the electric vehicle industry.