{"id":83264,"date":"2024-03-26T00:00:00","date_gmt":"2024-03-26T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/climate\/2024\/03\/26\/saudis-pif-doubles-down-on-lucid-with-usd-1-bn-investment\/"},"modified":"2024-03-26T00:00:00","modified_gmt":"2024-03-26T00:00:00","slug":"saudis-pif-doubles-down-on-lucid-with-usd-1-bn-investment","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/climate\/2024\/03\/26\/saudis-pif-doubles-down-on-lucid-with-usd-1-bn-investment\/","title":{"rendered":"Saudi\u2019s PIF doubles down on Lucid with USD 1 bn investment"},"content":{"rendered":"

A unit of the Saudi sovereign wealth fund the Public Investment Fund is buying an <\/strong>additional USD 1 bn <\/strong>worth of stock in US luxury EV manufacturer Lucid Motors<\/strong>, according to a statement<\/a>. PIF unit Ayar Third Investment Company will execute the transaction, which will see it buy convertible preferred stock. The EV maker raised USD 3 bn<\/a> in capital in 2Q 2023 of which USD 1.8 bn came from the PIF.<\/p>\n

The potential proceeds will finance the company\u2019s capex and working capital<\/strong>, among other things, the statement reads.<\/p>\n

What they said:<\/strong> \u201cWith their support, we remain focused upon accelerating our growth via deliveries, executing key business initiatives with relentless focus upon cost, and launching our game-changing Gravity SUV later this year,\" said Lucid CEO and CTO Peter Rawlinson.<\/p>\n

Market reacts quickly: <\/strong>Lucid\u2019s share prices rose 5.4% to USD 2.90 a piece<\/a> at yesterday\u2019s close. Lucid shares are down 31% since the beginning of the year, in large part reflecting the belief among some pundits that US appetite for EVs \u2014 which rose to a peak during covid \u2014 has fallen off. A number of high-profile conventional car makers have said in the past two months that they\u2019re downsizing their electric vehicle plans.<\/p>\n

Uh, Enterprise? What\u2019s convertible preferred stock? <\/strong>You can think of it as a kind of hybrid between equity and a bond. PIF\u2019s Ayar is giving Lucid USD 1 bn. There are three keys here: \u201cpreferred\u201d means that Ayar gets dividend payments if Lucid starts making them, just like regular preferred stock. But Ayar is also locking in an upside: It\u2019s not buying common stock in the company. If the value of Lucid\u2019s shares go above the price at which Ayar bought in, it can \u2014 if it wants \u2014 swap its convertible preferred stock for ordinary shares and book the difference in value as gain on the investment. <\/p>\n

The statement doesn\u2019t get into any conditions on the conversion <\/strong>or the implied price per share at which Ayar is buying in. <\/p>\n

Digging beyond PIF\u2019s deep pockets:<\/strong> Lucid CEO Peter Rawlinson recently told<\/a> the Financial Times his company cannot depend on the \u201cbottomless wealth\u201d of its Saudi owner and therefore needs to raise funds this year. \u201cIt\u2019s inevitable we need to raise in the future, it\u2019s just a question of when,\u201d Rawlinson said. \u201cWe need to pick our moment.\u201d<\/p>\n

REMEMBER- <\/strong>Lucid Motors saw its net loss for 2023 come in at USD 2.8 bn<\/a>, more than double the USD 1.3 bn it lost the year before. Revenues dipped 2% y-o-y to USD 595 mn in 2023. For the fourth quarter, the automaker\u2019s losses came in at USD 654 mn, against USD 473 mn in the comparable period.<\/p>\n","protected":false},"excerpt":{"rendered":"

A share of the proceeds will finance Lucid\u2019s capex and working capital<\/p>\n","protected":false},"author":1,"featured_media":83265,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[152],"tags":[11,64,151,194,293,159],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-83264","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment-watch","tag-enterpriseclimate","tag-evs","tag-investment-watch","tag-lucid-motors","tag-pif","tag-saudi-arabia","wpautop","entry"],"acf":{"mongo_id":"672238e9-7504-4bce-81e5-75444ffe6fdb","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2024\/2\/2281.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Saudi\u2019s PIF doubles down on Lucid with USD 1 bn investment","related_issue":[83259],"teaser":"A share of the proceeds will finance Lucid\u2019s capex and working capital","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2024\/3\/.9923a2a1-4274-4cb2-8cb9-ac723147f8d8.mp3"},"yoast_head":"\nSaudi\u2019s PIF doubles down on Lucid with USD 1 bn investment - 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