Chinese Car Rental Companies EHi, China Auto Said to Plan IPOs

Aug 26, 2014 11:20 pm ET

Aug. 27 (Bloomberg) -- China’s two biggest car-rental companies are planning to raise about a combined $600 million in initial public offerings this year to fund fleet expansion, said people with knowledge of the matter.

China Auto Rental Inc., the country’s biggest operator, plans to start marketing a $400 million Hong Kong IPO next month, said two of the people, who asked not to be identified discussing a confidential process. EHi Auto Services Ltd. plans to seek about $200 million in a U.S. initial sale in the fourth quarter, said two other people.

The companies are seeking money to expand their fleets as growth in leisure and business travel spurs the use of rental cars in China. China Auto Rental more than doubled its fleet size to 55,403 vehicles from the end of 2011 to March 31, according to a May 22 filing.

China Auto Rental had also considered a U.S. listing before ultimately opting to go public in Hong Kong.

Deutsche Bank AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are managing the EHi offering, while Credit Suisse Group AG, Morgan Stanley and China International Capital Corp. are working on the China Auto IPO, the people said.

China Auto Rental had 31.2 percent of the country’s market for short-term car rentals last year, the company said in the May 22 filing, citing data from Roland Berger Strategy Consultants. That compares with an 8.1 percent share for EHi, China Auto’s largest competitor, the filing showed. EHi’s website shows it operates a fleet of more than 10,000 vehicles.

Ctrip.com International Ltd., China’s biggest online travel agency, bought a 19.6 percent stake in EHi for about $94 million in December, according to a March 28 filing.

A Hong Kong-based external spokeswoman for China Auto declined to comment on its IPO. Calls to EHi’s head office in Shanghai went unanswered.