January 19, China Auto Rental Ltd. plans to raise up to $300 million in an IPO of its American depositary shares, the company said on Wednesday in a filing.
This would be the first Chinese company looking for over sea IPO this year.
JP Morgan has been appointed as underwriter to the deal, and the company has applied to trade under the ticker symbol “CARH” on the New York Stock Exchange, according to China Auto’s prospectus.
The car rental firm hasn’t unveiled details about the issue price or amount of shares on offer.
The proceeds from the offering will be used for vehicle acquisition which will further expand the firms’ rental fleet, and for repayment of certain borrowings, the company said.
Headquartered in Beijing, China Auto provides higher end car rental services and assorted value-added services.
Underdeveloped Industry
China's car rental industry is at an early stage of development but is showing signs of rapid development, driven largely by strong economic growth, urbanization, rising disposable incomes, improvements in the country’s road infrastructure, the increasing burden of car ownership and a favorable policy environment.
According to strategy consultancy Roland Berger, total revenues in China's car rental industry grew from approximately RMB 5 billion ($792 million) in 2005 to approximately RMB 17 billion in 2010, representing a CAGR of 27%.
Industry revenues are expected to further increase to approximately RMB 39 billion in 2015, representing a CAGR of 18% from 2010 to 2015, according to Roland Berger.
As of Dec. 31, 2010, there were over 10,000 car rental companies in China with an average fleet size of no more than 50 vehicles.
The car rental penetration rate, the number of rental vehicles as a percentage of the total number of registered passenger vehicles, is significantly lower in China than in more mature markets, which indicates substantial growth potential.
In contrast to more mature markets, the majority of car rentals in China are for business use, while leisure use and replacement rentals constitute a smaller yet rapidly growing percentage of the total market, according to Roland Berger.
edited by Jin ZHANG
