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Tag: joint venture

  • Rivian stock soars as Volkswagen agrees to invest up to $5 Billion in new joint venture

    Rivian stock soars as Volkswagen agrees to invest up to $5 Billion in new joint venture

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    Rivian stock (RIVN) surged on Wednesday after the EV maker announced a joint venture deal with Volkswagen (VWAGY), crucially bringing fresh capital into Rivian’s coffers.

    Volkswagen announced it intends to work with Rivian to create “next generation software-defined vehicle (SDV) architectures” to be used in both companies’ future EVs. The joint venture will use Rivian’s “zonal hardware design” and platform as the foundation of future vehicles, as well as Rivian’s electrical architecture expertise for the vehicles. Rivian will license its existing IP rights to the joint venture.

    In exchange, Volkswagen will invest an initial $1 billion in Rivian through an “unsecured convertible note that will convert into Rivian’s common stock,” with up to $4 billion in additional investment staged through 2026 for a total infusion of $5 billion.

    Irving, Calif.-based Rivian’s shares closed up 23.2% on Wednesday.

    “The partnership fits seamlessly with our existing software strategy, our products, and partnerships. We are strengthening our technology profile and our competitiveness,” Volkswagen Group CEO Oliver Blume said in a statement.

    “Not only is this partnership expected to bring our software and associated zonal architecture to an even broader market through Volkswagen Group’s global reach, but this partnership also is expected to help secure our capital needs for substantial growth,” Rivian CEO RJ Scaringe said in the statement.

    For Rivian, the news of fresh capital allays concerns over the company’s runway as it bridges to the release of its next-generation vehicles, the R2 and R3 mass-market SUVs. In terms of its cash cushion, Rivian said it had $5.98 billion at the end of Q1 versus $7.86 billion at the end of Q4.

    “This news is meaningfully positive for RIVN as the agreement should provide the company with access to capital to not only fund the ramp-up of production of the R2 at its Normal, IL facility but also to build a new facility in Georgia for its mid-size vehicle platform,” Bank of America analyst John Murphy wrote in a note to clients on Wednesday. “We have assumed RIVN would need to raise more capital, and VW’s investments in RIVN will prove valuable in helping it achieve the scale necessary to get to positive free cash flow.”

    LAGUNA BEACH, CALIFORNIA - MARCH 07: The Rivian R3 SUV is displayed during the Rivian Reveals All-Electric R2 Midsize SUV event at Rivian South Coast Theater on March 07, 2024 in Laguna Beach, California. (Photo by Phillip Faraone/Getty Images for Rivian)

    Cash infusion: A Rivian R3 SUV is displayed during the Rivian Reveals All-Electric R2 Midsize SUV event at Rivian South Coast Theater in March. (Phillip Faraone/Getty Images for Rivian) (Phillip Faraone via Getty Images)

    Murphy also noted potential benefits from cost savings and operating efficiencies in the joint venture deal, which could ultimately lead to higher gross margins.

    Separately, Scaringe told Reuters yesterday that Rivian was improving its cost structure and simplifying production at its Normal, Ill., plant via upgrades to its factory equipment, among other things.

    Pras Subramanian is a reporter for Yahoo Finance covering the auto industry. You can follow him on Twitter and on Instagram.

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  • India’s Bengaluru Airport Ties Up 15-Year Retail Joint Venture With Dufry

    India’s Bengaluru Airport Ties Up 15-Year Retail Joint Venture With Dufry

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    Global travel retailer Dufry will operate the duty-free shops at South India’s busiest airport under a newly agreed joint venture that is scheduled to start on April 1, next year. The deal was struck after the operator of Bengaluru Airport—the gateway to India’s technology hub—issued an open tender in November 2021 which Dufry won.

    The Switzerland-based retailer will partner with the operator, Bangalore International Airport Limited (BIAL), in a 50:50 joint venture with a 15-year contract to operate and manage duty-free outlets in the airport’s new Terminal 2.

    Dufry, which has seen strong growth in Q3, already runs duty-free shops at Bengaluru Airport—the full name is Kempegowda International Airport—and has done so since 2008 through its subsidiary Nuance. The new deal secured the retailer’s position at the new T2 where works are meant to finish by the end of the first quarter in 2023. A Dufry spokesperson told Forbes.com: “All international flights will be migrated to this new terminal.”

    BIAL describes the new T2 as a ‘terminal in a garden’ thanks to the greenery of the complex which includes planted walls, hanging gardens, artificial waterfalls, and outdoor gardens surrounding a lagoon. The building—which will be officially inaugurated by India’s prime minister Narendra Modi on November 11—will boost Bengaluru Airport’s passenger capacity by 25 million annually, in the first phase of the project. An additional 20 million will be added in the second phase.

    From a retail perspective, the capacity boost promises a steady increase in passengers in the coming years. In the 12 months to March 2022, Kempegowda International was the third busiest airport in India handling 16.3 million passengers, and between April and October this year, it processed almost 17 million of which two million were international.

    A JV to spur luxury, fashion, and beauty

    Dufry’s contract covers almost 40,000 square feet of retail space spread across international departures and arrivals in the new terminal. The joint venture is not restricted to core duty-free shops and allows the possibility for Dufry to look at introducing luxury boutiques and other formats. A spokesperson said: “Further developments and extension of the contract within the JV are possible.”

    Given that both BIAL, the airport operator, and Dufry are sharing the risks and rewards, it should be easier for the Swiss retailer to move forward with new retail concepts so long as they are commercially viable.

    In a statement, Dufry’s chief operating officer for the Mediterranean, Eastern Europe, and Middle East regions, Alberto Iglesias, said: “We are committed to providing passengers with an enhanced shopping experience and featuring a considerably extended product assortment.”

    For its part, BIAL seems happy to deepen its longstanding relationship with Dufry in a new terminal that is expected to wow Indian travelers. The airport’s chief commercial officer, Kenneth Guldbjerg, said: “We will benefit from Dufry’s expertise to take the airport’s shopping experience to an entirely new level. He added that, through the JV, the airport was looking to up its game across several categories “especially in luxury fashion, beauty, and confectionery.”

    This is not Dufry’s first airport JV. The travel retailer works in similar partnerships in Milan Linate Airport, Sharjah in the UAE
    UAE
    , and across several U.S. airports where ACDBE cooperation is often a legal requirement. Airport owners have increasingly been moving towards joint ventures with retailers over the years to pocket more revenue. Other examples include Heinemann and Fraport at Frankfurt Airport; and Lagardère Travel Retail at Paris Charles de Gaulle and Paris Orly airports.

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