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 buying the 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.
With the shareholding of around 10 percent, BAIC is looking to secure a seat on Daimler’s supervisory board, which Geely does not currently have, the sources said.
The HSBC banking group, which advised BAIC on its 5 percent stake purchase in Daimler earlier, is helping the Beijing-based group in the new investment, one of the sources said.
Daimler said in a regulatory filing last month that HSBC held 5.23 percent in Daimler’s voting rights directly as well as 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’s thinking said that BAIC wanted to be a bigger shareholder than Geely in Daimler in order to be seen as the German automaker’s senior-most partner in China.
Reuters reported in November that BAIC had signaled intentions to extend its investment in Daimler, citing sources familiar with the matter.
BAIC has been Daimler’s main partner in China for years and operates Mercedes-Benz factories in Beijing through the two automakers’ main joint venture, Beijing Benz Automotive.
Two months before its 5 percent stake purchase was announced in July, sources told Reuters that BAIC wanted to invest in Daimler to secure its investment in Beijing Benz Automotive.
The partners also planned to revamp manufacturing facilities to make Mercedes-branded trucks via their commercial vehicle joint venture Foton Daimler Automotive (BFDA), Reuters reported in August citing a document and sources familiar with matter.
BAIC built its 5 percent Daimler stake after Li Shufu, chairman of Zhejiang-based private automaker Geely, built a 9.69 percent stake in Daimler in early 2018.
By using Hong Kong shell companies, derivatives, bank financing and structured share options, Li kept the plan under wraps until he was able, at a stroke, to become Daimler’s single largest shareholder.
Since the investment, Geely and Daimler have said they plan to build the next generation of Smart electric cars in China through a joint venture.
Geely owns Volvo and a 49.9 percent stake in Malaysian car maker Proton, while BAIC, in addition to Daimler, has a partnership with South Korea’s Hyundai Motor.
