Report: China's BAIC Wants to Increase Daimler Stake

A new report indicates that BAIC Motor Corp, Daimler’s primary Chinese joint-venture partner, wants to increase its stake in the company. Currently, BAIC owns 5 percent of the German automaker ( purchased in July) with rumors swirling in October that the firm wanted to increase its investment. There were also claims that Geely was attempting to stand in the way of the prospective deal.

While not Daimler’s main squeeze in Asia from a production perspective, Geely actually owns 9.7 percent of the company — giving it quite a bit of leverage. As such, there were murmurings that Geely put the kibosh on any ideas BAIC had on investing further. Geely has rebuffed the accusation. “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,” the firm explained.

Be that as it may, there appears to be a minor power struggle between the two Chinese companies. Both seem interested in strengthening their influence and happen to find themselves in each other’s way.

On Friday, Mercedes-Benz’s parent issued a regulatory filing indicating HSBC held 5.23 percent of Daimler’s voting rights directly as well as through instruments such as equity swaps as of November 15th.

Reuters reports that BAIC previously used HSBC to help it build its initial 5 percent stake — noting that the Chinese automaker held investor conferences in October where corporate executives said “both sides are willing to increase stakes in the other.” Thus far, Daimler has only confirmed that it had received notification from HSBC that the voting stake of 5 percent had been exceeded.

From Reuters:

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 AG 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 capitalization of our company,” the statement continued.

The outlet claimed its information should foreshadow further investments, noting that similar sources indicated BAIC wanted to dump money into the Germany manufacturer to solidify investments into the Beijing Benz Automotive joint venture just two months before that exact situation unfolded.

In March, individuals also told Reuters that Daimler had asked Goldman Sachs to look into how it might increase its own stake in the Hong Kong listed BAIC. The duo have also publicly stated a plan to revamp and expand their joint operations in Asia to include commercial vehicles and battery technology.

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