BAIC to increase Daimler holding after 5 per cent stake buy

November 27, 2019

Daimler’s main Chinese joint venture partner BAIC Group has signaled its intention to increase its stake in the German luxury car manufacturer, sources briefed on the matter said, after it built up a 5% Daimler holding in July.

Officials at BAIC’s listed company, BAIC Motor Corporation, said at investor conferences in mid-October that “both sides are willing to increase stakes in the other”, responding to questions about future relationship between BAIC Group and Daimler, the sources said. Ola Kaellenius, Chairman of the Board of Management of Daimler, spoke at a media event during an auto show in Guangzhou, China, recently.

Daimler said in a regulatory filing on Friday that HSBC held 5.23% in Daimler’s voting rights directly as well as through instruments such as equity swaps as of Nov.15. BAIC has used HSBC to help it build its initial 5% stake.

Sources declined to be named as they are not allowed to speak to media. A Daimler spokesman on Monday said, that the company had received notification from HSBC that the voting stake of 5% has been exceeded.

While the spokesman would not say whether BAIC played a role in the transaction, he added that Daimler welcomed long-term shareholders such as BAIC, who support the carmaker’s strategies.

“Daimler appreciates BAIC as long-standing partner and long-term investor,” the spokesman said in a written statement.

“Such shareholders help us to further safeguard and strengthen the capitalizstion of our company,” the statement continued. BAIC was not immediately available for comment.

Geely, Daimler’s biggest shareholder with a 9.7% stake, said: “We are a long-term investor in Daimler. We do not react spontaneously to any volatility and we support Daimler’s management and their strategy.” BAIC (Beijing Automobile Group Co) has been Daimler’s main partner in China for years and operates Mercedes-Benz factories in Beijing through Beijing Benz Automotive.

Two months before its July stake deal was announced, sources told Reuters that BAIC wanted to invest in Daimler to secure its investment in Beijing Benz Automotive.