Ideanomics Inc (NASDAQ:IDEX) said Monday the Qingdao City Construction Investment Group Limited (QCCIG) has entered into a framework strategic cooperation agreement with Sun Seven Stars Investment Group Limited (SSSIG) to fund investment projects.
Ideanomics said it’s Mobile Energy Global (MEG) division will eventually benefit from the agreement under which both groups would raise up to US$7 billion to finance investment projects in the city of Qingdao and Shandong province in China.
About 20% of the money will be earmarked to finance the purchase of electric vehicles (EVs) to replace existing gas-powered fleets in Shandong province, the company said in a statement.
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Ideanomics pointed out that the fund will sign an agreement with its MEG Group once it is fully formed and the monies are in place to provide MEG financing for EVs. MEG will be the beneficiary of these funds through EV sales, leasing and financing services, and charging-related energy sales.
The agreement is a three-year collaboration between QCCIG and SSSIG, and is designed to help elevate the overall economic development of Qingdao. QCCIG is the premier investment arm of Qingdao, which is the largest city in Shandong province.
Under the terms of the agreement, QCCIG will provide financial support for the establishment of the funds, in addition to various policy and project resources. SSSIG will provide industry expertise in investments and capital markets to raise funds for various projects and commercial initiatives in Qingdao.
SSSIG, which is Ideanomics largest shareholder, will raise up to US$7 billion for QCCIG from financial partners including, but not limited to, insurance companies as well as other central enterprises and institutions. QCCIG's AAA-rated investment will guarantee the principle of the investment.
Fleet financing hurdles
The strategic cooperation agreement is the first in a series of several fundraising agreements designed to solve fleet financing hurdles, the company said.
These funds may be used to help fleet operators receive the necessary financing and loans to replace fleets of hundreds and thousands of gas-powered vehicles with EVs. Over the course of the year, SSSIG's goal is to sign between three and six similar deals with 20% to 30% of the funds being allocated to MEG for fleet financing.
"The additional funds to support fleet operator sales of commercial electric vehicles in Qingdao solves one of the largest hurdles to commercial EV conversion, large-scale EV purchases," said Ideanomics CEO Alf Poor.
"Innovative financing programs are a key component in enabling these EV sales, and the funds may further extend our ability to finance purchases that would otherwise not be possible for commercial fleet operators. The ability to secure competitive financing enables a faster transition over to EV, which in turn unlocks further substantial savings in both fuel and maintenance costs, as well as eliminating the fossil fuel emissions which are damaging to the environment."
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