China's Car Inc raises HK$3.4b in IPO after rush from retail investors
China's largest car rental company has left competitors trailing in its dust after raising HK$3.4 billion in a Hong Kong initial public offering that was especially popular with retail investors.
China's largest car rental company has left competitors trailing in its dust after raising HK$3.4 billion in a Hong Kong initial public offering that was especially popular with retail investors.
At HK$8.50 each, shares of Car Inc, formerly known as China Auto Rental, were priced at the high end of analyst expectations after being 202 times oversubscribed. To meet local retail investor demand the firm reallocated some of its global offering to Hong Kong.
"The promising outlook in China's car rental industry and the company's position as a dominant player in the sector has prompted investors to chase this stock," said Ben Kwong Man-bun, a director of brokerage firm KGI Asia. "Some named cornerstone investors in the deal also enhanced market confidence."
The mainland's car rental market is forecast to surge to 65 billion yuan (HK$82 billion) by 2018 from 34 billion yuan last year, the company said in its draft IPO prospectus.
The mainland's market for short-term self-drive car rentals was expected to grow at an average of 27 per cent annually from last year to 2018, more than double the 13 per cent growth in Brazil and far outpacing the 6 per cent expansion in the United States and 2 per cent in Japan, the company said. Long-term rentals were forecast to grow 11 per cent a year in the same period.
Car Inc plans to use 65 per cent of the offer proceeds to expand its fleet. It will buy 45,000 to 60,000 vehicles, adding to the 55,000 cars it had at the end of March. It said 19 per cent of the funds would be used to pay down loans and 6 per cent would be set aside for working capital.