Ideanomics (NASDAQ: IDEX) has entered into a joint venture agreement with Beijing Central Finova Financial Service Co. Ltd (BCF) to become the exclusive agent for BCF’s electric tour bus conversion business, which aims to convert up to 800,000 tour buses in China by end of 2022.
“The Chinese government mandate for all buses to be converted to electric vehicle (EV) by 2022 only emphasises the importance of this transaction,” said Alf Poor, President and COO of Ideanomics. “This tour bus EV conversion agreement has the potential of reaching a value of RMB800 billion (US$118 billion).”
The joint venture combines with Ideanomics previously announced agreement for the National Transportation Capacity Co (NTS) City Bus EV upgrade agreement under a RMB260 billion (US$38 billion) framework.
“Ideanomics will register the records of the EV transactions on the Blockchain,” said Poor. “Tracking these underlying assets efficiently and transparently will pave the way for future security token offerings (STOs) as and when regulation allows.”
Through the 50:50 joint venture Ideanomics becomes the exclusive agent and beneficiary of the consortium formed by BCF. The consortium members are made up of several national corporations: China Travel Service Holdings, China Travel Service International Financing Leasing Company Ltd, China General Advisory and Management Company Ltd, General (Beijing) Investment Fund Company Ltd, and Long River EV Group. All have entered into a strategic partnership agreement, focusing on China’s 800,000 tour bus fleet and targeted to be upgraded by 2022.
The deal was signed by Zheng Kangchun, CEO, Beijing Central Finova, and Dr Bruno Wu, Ideanomics’ former Chairman and CEO. Wu stepped down from Ideanomics as corporate officer in November 2018 to lead the US National Committee for China-US Relations, but remains a figurehead and special advisor to the company’s board of directors. Wu also continues as CEO and chairman of media and investment company Sun Seven Stars, Ideanomics’ largest shareholder. Wu has previously said China’s application of fintech to ventures such as bus electrification is causing a “paradigm shift” in the way the world views asset-based financial products.
The joint venture will receive commissions from sales of the vehicles of 15-20%, fees from lease financing of 0.5-1%, other asset backed securities (ABS) issuance of 1-2%, as well as the right to sell and franchise charging station networks, advising and revenue sharing for power supply agreement for the EV buses, as well as, managing passenger data platforms for payment and other data services.
BCF also participates in the management of the newly founded China Tourism Resources and Assets Trading Board originated by the Guo Ao Group, China Travel Service Financial Holdings, CITIC Guo An Group, Beijing Exchange Group, Beijing Central Finova and Beijing Future Science City, and has been approved by The China Securities Regulatory Commission and The State Administration of Tourism. Subject to regulatory approval BCF undertakes to secure the listing and trading of the joint ventures digitally issued financial and fractionalized Asset Backed Security products.
The agreements also cover lease financing and ABS sales and distribution of other types of EVs covered by the consortium such as city buses, special purpose vehicles, and hydrogen powered vehicles.
Beijing Central Finova Financial Service Co., Ltd was established in 2014, and is a hybrid state-private capital controlled financial holding and investment group. Beijing Central Finova Financial Service shareholders and strategic partners include leading and well-known financial investments covers various areas of financial investment. Beijing Central Finova’s current chairman is Li Jiange, former Chief Secretary to Premier Zhu Rongji , Vice chairman of CRSC and Chairman of CICC.
Launched in 2017, China Tourism Resources and Assets Exchange Center will be the first-ever national tourism investment project transaction platform. It will follow development direction of supply-side structural reform, further meet the needs of mass tourism and drive upgrading of the Chinese tourism industry through channeling, the firm says, “all kinds of capitals to plunge into the tourism industry”.