Saudi Public Investment Fund to Invest $1.8 Billion in Lucid, Raises Concern for Electric Car Market

Electric cars

The Lucid Group said it intends to raise about $3 billion through share offerings, with expectations that nearly two-thirds of the amount will come from the Saudi Public Investment Fund, which prompted shares of the luxury electric car maker to drop 9% in post-market trading.

And “Lucid” stated that the Public Investment Fund, which owns more than 60% of the company, agreed to buy 265.7 million shares in a private placement for about $ 1.8 billion, which implies a price per share of “Lucid” about $ 6.80, compared to the closing price of the day. Wednesday of $7.76.

The rest of the amount will be raised from a public offering of 173.5 million ordinary shares.

The extra money is important and comes as automakers moan, amid recession fears and a price war sparked by market leader Tesla.

“The secondary offering is probably going to be okay because there are a lot of ESG dollars looking for investments,” said Louis Navellier, chief investment officer at fund management firm Navillier, which entered the electric vehicle business and related investments but moved away from Lucid. “.

Lucid cash and cash equivalents fell to $900 million at the end of the first quarter of the year, compared to $1.74 billion in the previous quarter.

CFO Sherry House said the company has about $4.1 billion in liquidity, enough to fund the luxury electric car company for at least the second quarter of next year.

The luxury sedan maker cut its 2023 production forecast this month and reported lower-than-expected first-quarter revenue, which CEO Peter Rawlinson attributed to rising interest rates as a challenge to the market.

The California-based company is building its first overseas production plant in the kingdom, and the Saudi government has agreed to buy up to 100,000 Lucid vehicles over the next ten years.

On Wednesday, the company, which is set to unveil its Gravity SUV later this year ahead of its 2024 launch, said it plans to use the net proceeds from its offering for general corporate purposes, including capital expenditures and working capital.

Bank of America will act as bookrunner for the public offering and Lucid intends to use the net proceeds from both the public offering and private placement for general corporate purposes.

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