Abu Dhabi Fund’s $1 Billion Stake In EV Maker NIO Highlights Growing Arab-China Ties

An agreement this week by an investment arm of the Abu Dhabi government to invest more than $1 billion in Shanghai-headquartered electric vehicle maker NIO is the latest example of growing Arab-China business ties and an economic diversification effort by oil-rich Middle East nations.

NIO said on Tuesday it had agreed to sell CYVN Holdings, a mobility-focused investment company, 84.6 million shares at a price of $8.72 each, or approximately $738 million in cash. NIO also said on Tuesday that CYVN also agreed to buy another 40.1 million shares from an affiliate of existing NIO shareholder Tencent, one of China’s largest Internet companies.

The Tencent affiliate completed that sale yesterday, according to a Securities and Exchange Commission filing on Friday. CYVN paid $350 million for those additional shares, bringing its total investment in NIO to nearly $1.09 billion.

The Abu Dhabi government fund will hold a combined 7% of NIO and be entitled to nominate one director to the board. NIO and CYVN also agreed “to cooperate to jointly pursue opportunities in NIO’s international business,” NIO’s statement said.

The large investment underscores the growing clout of China’s auto industry and EV makers. China, already home of the world’s largest auto market, this year has also become the No. 1 exporter of cars. NIO delivered 31,041 vehicles in the first quarter of 2023, an increase of 20.5% from a year earlier.

CYVN Chairman Jassem Al Zaabi said the NIO investment is “driven by our appreciation of its leading brand, innovative and premium products, and proven technological capabilities in the smart electric vehicle market.” CYVN is “fully committed to providing strategic value that will support NIO’s international business growth,” he added in the statement.

Abu Dhabi’s capital will strengthen NIO’s balance sheet and help build long-term competitiveness, said NIO Chairman William Li. Li, who founded NIO in 2014, is worth $1.4 billion on the Forbes Real-Time Billionaires List today. The company, which ranked No. 1,915 on the Forbes Global 2000 list of the world’s top publicly traded business unveiled earlier this month, went public on the New York Stock Exchange in 2018.

The agreement came days after China and the Gulf Cooperation Council, an economic group of Middle East states that make up one of the world’s fastest-growing regions, wrapped up a high-profile Arab-China Business Conference in Riyadh. The gathering made international headlines for the size of the business deals announced—more than $10 billion involving approximately two dozen agreements. Among the agreements announced was a $5.6 billion investment by the Saudi Arabia Ministry of Investment and China EV maker Human Horizons.

The event also grabbed attention because of the warming relations between China and an area with traditionally close ties to the United States. Members of the Gulf Cooperation Council, or GCC, include the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar, and Kuwait.

The Middle East’s sovereign wealth funds are increasingly active in Asia, Forbes Middle East’s managing editor Claudine Coletti said in an interview earlier this month. Abu Dhabi’s Mubadala, for instance, in 2015 partnered with China Development Bank Capital and State Administrative of Foreign Exchange of China to create a $10 billion fund to invest in projects of “strategic and commercial importance in China.” Today, Mubadala has an office in Beijing, capital commitments of more than $5 billion, and investments 70-plus businesses that include social media Kuaishou and EV maker XPeng. The Qatar Investment Authority, the Abu Dhabi Investment Authority, and the Kuwait Investment Authority have also made moves to invest in China, Coletti noted.

Earlier this year, Saudi Arabia’s Public Investment Fund invested $265 million in an e-sports company in China backed by Tencent. Beyond China itself, there’s also an interest among the Middle East sovereign wealth funds in creating stronger ties and finding opportunities in other Asian markets, Coletti said.

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