(Yicai Global) June 19 -- CYVN Holdings, an investment firm backed by the Abu Dhabi government, will invest about USD738.5 million in Nio, strengthening the Chinese electric vehicle startup’s balance sheet.

CYVN will buy nearly 84.7 million Class A ordinary shares of Nio for USD8.72 apiece in a private placement and another 40.1 million from Tencent Holdings, giving the investor about a 7 percent stake, the Shanghai-based carmaker said late yesterday.

The capital injection will bolster Nio’s finances amid an auto price war in China that Tesla triggered in January. Nio was one of the few carmakers that did not initially follow suit, but on June 12 it announced a CNY30,000 (USD4,175) price cut on all models. After sales had fallen for four months in a row, market insiders noted that Nio had no choice if it wanted to preserve market share.

“The strategic investments from CYVN demonstrate Nio’s unique values in the smart EV industry,” said William Li, Nio’s founder, chairman, and chief executive. “The investment will further strengthen our balance sheet to power our continuous endeavors in accelerating business growth, driving technological innovations, and building long-term competitiveness.

“In addition, we are excited about the prospect of partnering with CYVN to expand our international business,” Li noted.

After the transactions complete, CYVN will be entitled to nominate a director to Nio’s board, the automaker added.

Nio’s Hong Kong-listed shares [HKG: 9866] rose 3.8 percent to close at HKD73.25 (USD9.36) each today. In New York, the stock [NYSE: NIO] ended down 0.5 percent at USD9.35.

Nio’s first-quarter revenue rose 7.7 percent to CNY10.7 billion (USD1.5 billion) from a year earlier, but fell 36 percent from the previous quarter. Its net loss widened 166 percent to CNY4.7 billion (USD660 million), while its quarterly gross profit margin slumped to 1.5 percent because of product portfolio changes and higher battery costs.

Nio handed 31,000 autos to buyers in the three months ended February 28, a 21 percent increase from a year ago, but expects its second-quarter deliveries to shrink 0.2 percent to 8.2 percent to between 23,000 and 25,000 units from the same period last year.

The company had two Nio Houses, six Nio Spaces, 37 service centers, and 388,000 charging piles overseas as of March 31 and sold 325 units abroad.

Editor: Futura Costaglione