Li Auto carved out its chip and domain-controller unit at a 16.6 billion yuan valuation

Li Auto announced on October 16 that it had agreed subscriptions totaling 1.625 billion yuan into Shanghai Mahe Xin Technology, the platform for its chip and domain-controller business in China. Its own intermediate holding company subscribed 1 billion yuan of increased registered capital and four outside investors 625 million yuan, at 23.35 yuan per unit of registered capital. The filing puts the implied pre-transaction valuation at 15 billion yuan and the agreed post-transaction valuation at about 16.63 billion yuan.

The round was led by Hangzhou Jingtao, Lanchi Ventures and Huaye Tiancheng, with MiraclePlus participating. Hangzhou Jingtao holds a one-off right, exercisable on or before December 31, to subscribe for up to a further 500 million yuan at the same price. Mahe Xin will also adopt two incentive schemes, with mandate limits of 15 and 5 percent of enlarged registered capital. The filing’s own table puts the four outside investors at 3.75 percent of that capital on the deal as signed, rising to about 6.58 percent if the subscription right is exercised in full, with 19.41 percent reserved for the incentive schemes. On that basis Li Auto’s holding company falls from 100 percent to about 74.01 percent, which the filing calls a deemed or possible disposal of about 25.99 percent. Mahe Xin stays a subsidiary throughout.

The business model will be built on a full-stack “chip-controller-operating system” technology and product system, with core technologies covering dynamic data-flow architecture chips and algorithm-compiler-OS-chip co-design, and the filing calls it a second growth curve for the group. It also records that Mahe Xin was established on August 12, has not begun substantive operations, has booked no revenue or profit and held no assets at the announcement date, with assets and intellectual property still to be transferred. The transactions may or may not proceed.