Capitalists venture US$20m into mainland firm eHi Car Rental

Alternative asset fund manager CDH Investments has joined with venture capital firms Qiming Venture Partners and Jafco Asia to invest US$20 million in Shanghai-based car rental company, eHi Car Rental.

EHi said in a statement that it would use the proceeds to expand its fleet and increase its number of outlets nationwide.

Ray Zhang, the company's founder and chief executive, said the second round of fundraising by eHi would help the firm fine-tune service and offer corporate clients better prices as it vies for a bigger share in the mainland's highly competitive car rental sector.

EHi, which was founded in 2006, received US$5 million from Qiming in May last year, and it is facing fierce competition from a host of rivals including Shenzhen TopOne Car Rental and Anji Car Rental and Leasing, a joint venture between Avis Europe and Shanghai Automotive Industrial Sales.

CDH Investments was established in 2002 by the former private equity group of China International Capital Corp and has since become a joint-venture unit of China Jianyin Investment.

'Scale holds the key to a car rental firm's success,' said Lu Liang, a manager at Hotung Venture Capital. 'Only car rental firms with a larger network in the vast mainland market can generate profits.'