Li Shufu, Chairman of Zhejiang Geely Holding Group Co. Photo: AFP

Chinese multinational automotive manufacturer Geely is combatting rumors the company used funds from domestic state-owned enterprises to acquire a major stake in German automotive firm Daimler AG, The Paper reported.

Yang Xueliang, vice president of Geely, said the investment was made by an overseas subsidiary of Geely through overseas capital market arrangements and did not use any funds in China.

Also commenting was Li Donghui, executive vice president of Geely, who said the acquisition will be financed through a series of capital arrangements of debts, equities and financial products. and it will need to use only a very limited amount of funds.

Through it’s been reported that it will be a US$9 billion investment, Li Shufu, chairman of Geely, said even if it appears to be a relatively large transaction, it is essentially a transfer of funds between equity and cash. In fact, it is more convenient for the company to realize the self-balancing of trading funds overseas, Li said.

On February 24 Geely announced that it had acquired 9.69% of the voting shares in Daimler AG through its subsidiary. After the acquisition, Geely has become Daimler’s largest shareholder and promised to hold their equity for a lengthy term.

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