CAR back on road to an initial public offering

A customer visits a branch of China Auto Rental in Changzhou, East China's Jiangsu province, January 12?2014. [Photo/IC]

China Auto Rental Holding Inc, the country's largest vehicle-leasing company by fleet size and revenue, said on Thursday night that it had revived its initial public offering plans.

The listing will be in Hong Kong, it said. It didn't disclose the size or timing.

According to a company statement, 70 percent of the IPO proceeds will be used to expand its fleet, 20 percent to repay bank debt and 10 percent for operating expenses and other purposes.

?Soccer legend David Beckham teams with China Auto Rental

China Auto signs strategic alliance

Hong Kong media reported on Friday that the company aims to raise up to $400 million with the IPO. Those media reports didn't identify sources for the information.

In April 2012, the company suspended plans for an IPO in the United States, citing uncertain market conditions that might force it to slash its offering price.

Documents filed with the Hong Kong stock exchange show that between 2011 and 2013, CAR's annual revenue increased 81.6 percent on average. Revenue for 2013 was 2.7 billion yuan ($432.9 million).

In the first quarter of this year, net profit rose 300 percent to 163 million yuan.

As of March 31, the company had a national fleet of 55,403 vehicles, with 751 wholly owned stores in 69 Chinese cities.

According to Roland Berger Strategy Consultants, CAR's fleet was four times the size of the second-biggest player in the industry.

Founder and Chief Executive Officer Lu Zhengyao has said that CAR would seek to expand its fleet to 100,000 vehicles in 2015.

Revenues in China's car rental market have grown by 25 percent annually during the past five years. The value of the market is expected to surge from $2.5 billion in 2010 to $6.1 billion in 2015, according to Roland Berger.

Shen Jun, a partner at Roland Berger greater China, forecast the total fleet size of the rental car market would rise from 220,000 vehicles in 2012 to 430,000 in 2015.

The firm also found that as of Dec 31, 2013, CAR's share of the individual short-term rental market was 31.2 percent, the single largest percentage.

Last April, the world's biggest car rental operator, Hertz Global Holdings Inc, acquired a 20 percent stake in CAR. In exchange, CAR took over Hertz's car rental operations in China under an initial five-year license.

Zhang Ruiping, chief executive officer of CAR's largest competitor, eHi Auto Services Co Ltd, told China Daily earlier that the company is also "waiting for a suitable time to go public", aiming to raise cash to expand its fleet.