TheChek News Flow

UAE investment vehicle CYVN takes 20% stake in Chinese group as Beijing’s ties with Middle East groups deepen

Tesla rival Nio has secured a $2.2bn investment from Abu Dhabi-backed CYVN Holdings in a boost for the Chinese electric vehicle maker as Middle East groups and Beijing increasingly join forces in the clean tech transition.

The deal, which follows CYVN’s more than $1bn injection in Nio in July, will give the UAE investment vehicle 20 per cent of the Chinese group’s shares and is intended to ease worries among some analysts over the lossmaking company’s finances.

The strengthening corporate ties between China, the world’s biggest car market, and the Middle East is a growing trend as Beijing steps up its challenge to Washington’s dominance in the region. 

Nio listed in 2018 on New York’s Nasdaq exchange, but has struggled with heavy financial losses, production problems and the high costs of rolling out its battery swapping system — the technology at the heart of its business plan — and luxury showrooms. 

The battery swapping system involves unscrewing the bottom of the car and replacing the battery through a hatch in the floor, which takes about five minutes.

Nio believes the technology, which could be sold to other groups, offers a way to overcome worries among consumers about EV charging times and long-term battery health.

Despite a strong end of the year for China’s EV market, Nio has been hit by price cuts as the fight for market share intensifies.

The CYVN injection comes days after co-founder and president Lihong Qin said higher interest rates were making it harder to raise money. 

“We are looking for new investors, and financing is one of our daily jobs,” he said last week. “It never stops, it’s just that currently the global financial policy environment has made this work more challenging.”

He added that Nio had “not become profitable yet” and currently lost about $12,000 for every car it sells. 

“We definitely face a lot of challenges, but do not have concerns for short term survival,” he stressed. 

The company is expanding among a clutch of Chinese auto groups in Europe, with plans to launch a cheaper brand in the region in 2025.

The business, however, had also deferred plans to enter the US market because of the “urgency of profitability” as well as the tariffs and the costs of certifying vehicles, Qin added.

Nio will focus exports on Europe, where auto regulations are much closer to those in China, which lowers the costs of adapting its vehicles for the market. 

It has also entered a partnership with Geely and Chang’an in China to work together on battery swapping.

Analysts have argued it will be hard for the company to make battery swapping a viable technology without extensive partnerships to widen the system’s appeal. 

Monthly sales of plug-in hybrid and pure battery cars in China rose above 1mn for the first time in November, according to data from Automobility, a Shanghai consultancy.

China produced 8.3mn EVs in the first 11 months of the year, a record that far outpaces the US and Europe, with pure battery EVs rising to 5.9mn and plug-in hybrids to 2.4mn. 

Funds under management at Mike Novogratz-led group triple to more than $5bn

US billionaire Mike Novogratz’s cryptocurrency group Galaxy Digital is hunting for more asset sales by bankrupt digital assets companies after a deal to sell coins held by FTX trebled its funds under management.

Galaxy was chosen in August by administrators of the collapsed crypto exchange to sell, hedge and stake FTX’s bitcoin and ether coins, as well as its holdings of Grayscale’s bitcoin trust.

The win has helped swell New-York based Galaxy’s assets under management from $1.7bn a year ago to $5.3bn, the company told the Financial Times.

The surge in assets comes as welcome news to Galaxy, one of the world’s largest crypto financial services groups with extensive business in trading and investment banking. The company has struggled to recover from last year’s crypto market crash, and in the third quarter of this year it recorded a $94mn loss.

Its asset management arm has been slowly selling FTX’s tokens on to the open market to help the failed exchange’s administrators recover the value of assets and pay back creditors.

In September, a US court mandated that FTX assets could be sold in lots of $100mn per week but said that sales should be carried out without disrupting market prices or tipping off other traders.

Steve Kurz, global head of asset management at Galaxy, said the firm would be interested in acquiring the assets of other bankrupt companies.

Among potential targets is FTX’s vast venture capital portfolio of real estate and technology companies, including a stake in artificial intelligence start-up Anthropic, which was last valued at nearly $5bn in a funding round earlier this year.

“We have a crypto venture team that has been investing off our balance sheet for five years,” he said, referring to a subsidiary that has invested in companies such as digital asset security firm Fireblocks and blockchain platform Polygon.

“The record that we have on that side of our asset management business means we’d be a good candidate for something like that,” he said, referring to FTX’s venture portfolio.

Andrew Bond, senior research analyst at Rosenblatt Securities, said winning the FTX mandate was “massive” for Galaxy, adding that “it opens them up to win other mandates that will potentially be much more profitable.”

Galaxy, which is seeking to move its stock market listing from the Toronto stock exchange to New York’s Nasdaq, runs about a dozen funds spanning passive, active and venture capital. Earlier this month it teamed up with Dutch market maker Flow Traders and German asset manager DWS to launch a euro-denominated stablecoin, becoming the latest major institution to create its own token.

Galaxy has also joined the race for a hotly anticipated spot bitcoin exchange traded fund, seeking to run a fund with asset manager Invesco and derivatives exchange CME.

The price of bitcoin has surged by about 150 per cent to more than $41,000 this year in expectation of a flood of bitcoin ETFs that would open the asset class up to Wall Street.

“Crypto in the US had something close to a near-death experience,” Kurz said, adding that the “turning point really came this year when BlackRock filed for an ETF. He added that there had been “very frequent dialogue and we’re engaging with the SEC on a number of fronts”.

“The world doesn’t understand the impact that these vehicles and a bitcoin ETF will have to bitcoin and crypto over time,” added Kurz, who previously worked at Fortress Investment Group and Lehman Brothers. Approval would mark “a real watershed moment for crypto,” he said.

Plus: Serbia’s election sees Vučić strengthen his control of parliament

12th package for Christmas

The long-delayed 12th package of EU sanctions on Russia should be adopted this week after Austria lifted its objection, according to diplomats. But its measures are still not tight enough, according to some countries and industry groups, writes Andy Bounds.

Context: Vienna had told other member states its lawyers needed more time to assess the proposal, but several EU diplomats said its main concern was Ukraine’s inclusion of Raiffeisen Bank International on a blacklist as an “international sponsor of war”. Ukraine’s government website on Saturday said it had “suspended” its listing while it holds talks with the European Commission.

The Austrian bank continues to operate in Russia despite the war against Ukraine. Although it is cutting back its business, the country accounted for half its profits this year.

With the other 26 member states already signed up, diplomats said the sanctions package would be adopted today. “It is now a formality,” said one.

Officially, Austria says there is no link between the bank and the sanctions approval.

The main features of the sanctions package are well known. There will be a ban on Russian diamonds, as agreed by the G7 group of rich countries, starting January 1. The enforcement of the western price cap on Russian oil — at $60 a barrel — will be tightened after widespread circumvention. 

Russian aluminium will be sanctioned for the first time, with a ban on imports of wires, foil, tubes and pipes. However, the EU industry is lobbying for far more, noting the products covered account for just 15 per cent of imports.

“If aluminium sanctions are to have any effect on the Russian economy and its ability to wage war, a much more comprehensive measure will be required,” European Aluminium, the industry group, wrote to the commission on December 8.

There is also a weakening of import controls on luxury goods. EU citizens will now be allowed to keep cars they drive out of Russia, provided the country where they cross the border agrees.

Several countries asked for the move, diplomats said, although not those on Russia’s border who must enforce the rules.

“We will allow this only in very, very specific cases,” said one frontier state diplomat.

Ryanair’s shares are up by more than 50 per cent this year, a surge that has cemented the low-cost carrier’s position as by far the most valuable airline in Europe — and setting up boss Michael O’Leary to earn a €100mn bonus.

Vučić victorious

The incumbent Serbian Progressive Party (SNS) of President Aleksandar Vučić is on course to command enough parliamentary seats to govern alone in a snap election on Sunday marred by repeated complaints of voting irregularities, writes Marton Dunai.

Context: The victory solidifies the rule of the embattled president, who faced massive protests for months after a pair of school shootings in May that killed 17, mostly young people. Vučić, who has refused to sanction Russia and maintains close ties with China, has also faced tensions in Kosovo that threatened to spiral out of control.

Pollsters Ipsos and CeSID put SNS voter backing at 47 per cent, while the opposition Serbia Against Violence group was a distant second with about a quarter of the vote.

“Welcome to the celebration,” Prime Minister Ana Brnabić, who is expected to step down despite the victory, told party supporters as the first results and polling numbers began to trickle in. Although final results will take some time to crystallise, Brnabić said initial numbers showed SNS would gain at least half of the 250-seat Serbian parliament.

Although popular dissatisfaction fell far short of challenging Vučić in a meaningful way, the voting irregularities — which included lots of people bussed from other parts of Serbia to vote in opposition-leaning Belgrade — would require a thorough review.

“Concentration of buses, pick-up vans and cars was observed on several spots in Belgrade, transferring voters to polling stations across the city to vote,” the Center for Research, Transparency and Accountability, a rights group, wrote in a statement. CRTA added that New Belgrade, across the Sava river from the city centre, was a “place of gathering” for voters from as far a field as Bosnia or Kosovo.

Brnabić called the reports “fake news”.