Geely’s Li Shufu $9 billion stake in Daimler

Geely’s Li Shufu $9 billion stake in Daimler

When Daimler announced that Li Shufu had acquired almost 10 percent of the automaker last Friday, it caught financial markets – and German regulators – by surprise.

Although the move seemed sudden, the head of the Chinese carmaker Geely had, according to multiple sources and documents reviewed by Reuters, spent months stealthily laying groundwork for the stake.

Two sources in Geely and one source close to the company said a senior executive there, Li Yifan, had for more than a year led a small team tasked with acquiring shares in Daimler.

By using Hong Kong shell companies, derivatives, bank financing and carefully structured share options, Li Shufu kept the plan under wraps until he could, at a stroke, become Daimler’s single largest shareholder.

The result was a $9 billion (6.54 billion pounds) investment that skirted disclosure rules requiring investors to notify German authorities if their share of voting rights in a company passed 3 percent, and then 5 percent. Because of the way the stake was built, there is no indication that Geely breached those rules.

“The fact that Li would invest did not come as a surprise,” said a senior Daimler executive, who did not want to be named because he was not authorised to speak to the media. “But how he went about it certainly was.”

 

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