Changan Automobile (长安汽车) released a statement on June 4, announced that its joint venture, Jiangling holding Co., Ltd.(江铃控股有限公司), intends to increase its capital by bringing in strategic investors. And this strategic investor is Always Auto (爱驰汽车) that before be rumoured.
Always Auto was founded in 2016 and has received a strategic investment of CNY 1 billion ( USD 148 million ) from Mingchi fund (明驰基金) recently.
It is reported that the capital increase will be carried out in cash. Always Auto intends to increase capital by CNY 1.75 billion (USD 252.7 million), of which CNY 1 billion (USD 144.7 million) will be included in the registered capital and CNY 746.60 million (USD 108 million ) will be included in the capital reserve.
It is worth pointing out that Always Motor's capital increase is not the former Jiangling holding company, but the existing company after the existing division of the former Jiangling holding company.
An announcement issued by Changan Automobile on April 3 said that Jiangling holdings intend to divide the former company into two new companies, Nanchang Jiangling investment Co., Ltd. (hereinafter referred to as "Jiangling investment") and Jiangling Holding Co., Ltd.
After Always Auto capital increase for Jiangling Holding Co., Ltd., its registered capital increased to CNY 2 billion, the corresponding shareholding structure has been changed. Always Auto holds 50%, Jiangling Automobile Group holds 25% and Changan Automobile holds 25%.
All current business of Jiangling Holdings, including land, plant, machinery and equipment, proprietary technology, manufacturing qualification, operation qualification and trade reputation owned by Jiangling holdings before the division, shall be inherited by the Jiangling Holdings.
That means Always Auto indirectly addressed the company's manufacturing credentials in a roundabout way. The U5, the first mass-production vehicle of Always Auto, was unveiled at the end of last year and is scheduled to go on sale by the end of this year.
With the approaching of the launch date, solving the production qualification is the first priority of Always Auto. The purchase of a controlling stake in Jiangling is also seen as a roundabout solution to production qualification.