UCAR to exit from China’s biggest car rental group after Luckin Coffee scandal infects stock value
- Lu’s UCAR agrees to sell its remaining shares in Car Inc to Beijing Automotive Group, following a stake sale in April
- Block sales follow incident at Luckin Coffee that ensnares investors in companies associated with the former billionaire
“Car rental is still a market with great potential to tap in China,” said Cao Hua, a partner at private equity firm Unity Asset Management. “It is understood that new investors are still interested in Car Inc’s business while its founder looks to exit.”
The divestment is a humbling experience for the executive, who has since apologised to investors ensnared by fabricated sales at the coffee chain touted as China’s Starbucks. Though unrelated, the scandal has not only hit both their stock prices and eroded trust in Chinese corporate governance, but also provoked a tougher response from stock exchange operator Nasdaq.
Car Inc’s shares plummeted 54 per cent on April 3 to HK$1.96 after the Luckin Coffee disclosure on 2.2 billion yuan of fictitious sales last year. Luckin has since fired chief executive Jenny Qian Zhiya and chief operating officer Liu Jian.
The break-up in UCAR investment leaves Legend Holdings, China’s leading investment group, as Car Inc’s single largest holder with a 26.6 per cent stake.
The Swiss bank, which is acting as an agent for the loan facility, filed the liquidation request to the Eastern Caribbean Supreme Court, High Court of Justice, in the British Virgin Islands on April 23, according to the BVI Gazette notice. A hearing is scheduled for June 8.