Li Shufu’s move marks the largest Chinese investment in the automotive realm, as well as Geely’s first partnership with a foreign automaker.
Self-made billionaire Li Shufu has amassed a 9.69% stake in Daimler AG through his company Zhejiang Geely Holding Group Co., making it the the German automaker’s top shareholder.
The Hong-Kong listed company enjoyed a 8.8% jump in share price today, for a market valuation of $30 billion. This $9 billion (RM35.23 billion) stake not only marks Geely’s first partnership with a foreign carmaker, but also the largest Chinese investment of its kind. Geely has also promised a RMB 11.9 billion (RM7.37 billion) investment to build a new Mercedes-Benz factory in China.
With a revenue exceeding RMB 270 billion (RM 167.2 billion) in 2017, Geely is China’s largest privately owned automotive manufacturing company. Its considerable stake in Daimler is viewed as a long-term investment, especially given China’s pioneering position in electo-mobility.
No domestic Chinese funds were involved in this investment. Instead, Geely financed it with a mixture of debt, equity, and overseas financial instruments.
Competitors that are challenging the global car industry in the 21st century technologically are not part of the automotive industry today. – Li Shufu
You may be familiar with Li’s company for its growing presence in the automotive realm. Zhejiang Geely Holding Group acquired Volvo Cars AB in 2010, and owns a $4 billion stake in truck-maker Volvo AB. Li’s 70,000-employee strong company also owns British sportscar manufacturer Lotus Motor Cars and Chinese car-sharing provider Cao Cao. Closer to home, its most notable presence is the 49.9% share in Proton Cars Malaysia.
With this move, Li and Geely are taking a lead role in autonomous and electronic mobility. In its bid to push fossil fuel out, China has positioned itself as the world’s largest, most promising market for electric vehicles. This timely partnership is made to flourish since Daimler is also focusing heavily on EV.
Li said in a statement, “Competitors that are challenging the global car industry in the 21st century technologically are not part of the automotive industry today. In order to succeed and seize the technology highland, one has to have friends, partners, and alliances and adapt a new way of thinking in terms of sharing and united strength.”
Additionally, Daimler has plans to loosen up its conglomerate structure by dividing the company into three units, namely Mercedes-Benz Cars & Vans, Daimler Trucks & Buses and the financial-services division. The Stuttgart-based manufacturer is no stranger to foreign investment – previously, its largest stakeholder was Kuwait’s sovereign wealth fund, which holds 6.8%.
Sources: Bloomberg & Zhejiang Geely Holding Co.