Automotive Daimler BAIC

Published on December 22nd, 2019 | by Daniel Sherman Fernandez

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BAIC rivals Geely to buy in 10 percent of Daimler

Last week there was hot industry news where Daimler‘s main China joint venture partner, BAIC Group initiated a plan to double its stake in the Daimler Group to around 10 percent and win a board seat in the Daimler Group. Sources in the industry said that the BAIC Group was on a mission to upstage its rival Geely.

State-owned Beijing Automobile Group Co Ltd(BAIC), which already owns a 5 percent shareholding in Daimler started buyingthe German company’s shares from the open market.

BAIC is currently Daimler’s third largest shareholder but a stake of 10 percent will make it the biggest shareholder, surpassing its Chinese rival Zhejiang Geely Holding Group which owns 9.69 percent of Daimler and is seeking to expand its partnership with Daimler in China.

Daimler

With the shareholding of around 10 percent,BAIC is looking to secure a seat on Daimler’s supervisory board, which Geelydoes not currently have, the sources said.

The HSBC banking group, which advised BAICon its 5 percent stake purchase in Daimler earlier, is helping theBeijing-based group in the new investment, one of the sources said.

Daimler said in a regulatory filing lastmonth that HSBC held 5.23 percent in Daimler’s voting rights directly as wellas through instruments such as equity swaps as of Nov. 15.

When asked by Reuters, Daimler said it had not received any notification about BAIC having raised its stake. Daimler’s China chief Hubertus Troska said on Friday “we welcome long-term investors in Daimler.”

A third source familiar with BAIC’sthinking said that BAIC wanted to be a bigger shareholder than Geely in Daimlerin order to be seen as the German automaker’s senior-most partner in China.

Reuters reported in November that BAIC hadsignaled intentions to extend its investment in Daimler, citing sourcesfamiliar with the matter.

BAIC has been Daimler’s main partner inChina for years and operates Mercedes-Benz factories in Beijing through the twoautomakers’ main joint venture, Beijing Benz Automotive.

Two months before its 5 percent stakepurchase was announced in July, sources told Reuters that BAIC wanted to investin Daimler to secure its investment in Beijing Benz Automotive.

BHP

The partners also planned to revampmanufacturing facilities to make Mercedes-branded trucks via their commercialvehicle joint venture Foton Daimler Automotive (BFDA), Reuters reported inAugust citing a document and sources familiar with matter.

BAIC built its 5 percent Daimler stakeafter Li Shufu, chairman of Zhejiang-based private automaker Geely, built a9.69 percent stake in Daimler in early 2018.

By using Hong Kong shell companies,derivatives, bank financing and structured share options, Li kept the planunder wraps until he was able, at a stroke, to become Daimler’s single largestshareholder.

Since the investment, Geely and Daimlerhave said they plan to build the next generation of Smart electric cars inChina through a joint venture.

Geely owns Volvo and a 49.9 percent stakein Malaysian car maker Proton, while BAIC, in addition to Daimler, has apartnership with South Korea’s Hyundai Motor.


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