General Motors has increased its stake in self-driving car subsidiary Cruise.
The automaker said late Friday that it is acquiring SoftBank Vision Fund 1’s stake in Cruz for $2.1 billion. GM is investing an additional $1.35 billion in Cruise, replacing an earlier fund commitment in 2018.
The announcement comes nearly six weeks after Cruise launched a limited service of unmanned taxi robots to the public in San Francisco, prompting SoftBank to unlock its already committed $1.35 billion investment.
It is not clear why SoftBank decided to sell now. A GM spokesperson said that the company’s stronger investment position not only simplifies Cruise’s shareholder structure, but also allows GM and Cruise to pursue the highest value-added path to commercialize and unlock the full potential of AV technology, and provides maximum flexibility.
GM CEO and Chairman Mary Barra said the move would boost shareholder value.
“We are very pleased to announce that GM is leveraging the strengths of its balance sheet to capitalize on the opportunity to increase its Cruise equity investment and advance our integrated autonomous vehicle strategy. We believe our investment represents an exceptional opportunity to create long-term shareholder value,” Barr said in a statement. “Our improved investment position not only simplifies Cruise’s shareholder structure, but also provides GM and Cruise with maximum flexibility. The most profitable way to commercialize and unlock the full potential of AV technologies. ,
GM’s heightened interest could pave the way for the automaker to sell the Cruze or even go public. GM does not say if an IPO is part of its short-term plans. However, a GM spokesman said that as the company matures, it will “look at every opportunity to create value for our shareholders.” A spokesman said GM is not ruling out a future Cruise IPO.
In addition to increasing GM investment, Cruise CEO Kyle Vogt announced that he has launched a recurring liquidity opportunity program – a new root in talent attraction and retention efforts. The program aims to provide employees with the liquidity and potential benefits they can get from listing their companies, but without actually going public, Vogt said.
Under the program, current and former employees may sell any number of shares they have purchased each quarter. These shares are being bought by GM or other companies, Vogt said. Value is determined by a third-party financial firm that evaluates the company’s performance, financial projections, market conditions, relevant fundraising transactions and events, and market structure.
“We expect this value to increase as we continue to successfully deploy and scale our technology,” Vogt wrote in a blog post announcing the program.