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MBK buys $228 mn stake in China’s No. 1 car rental firm

By Dec 03, 2020 (Gmt+09:00)

Beijing West Second Ring Road Financial Street (Courtesy of Getty Images Bank)
Beijing West Second Ring Road Financial Street (Courtesy of Getty Images Bank)

MBK Partners has now become the second-largest shareholder in both of China’s two biggest rental car companies after purchasing a 20.86% stake in China’s No. 1 rental car service provider Car Inc. for $228 million last month.

MBK's stake purchase follows its investment in China’s No. 2 car rental firm eHi Car Services, based in Shanghai, last year. MBK made the investment in a consortium including Baring Private Equity, in a deal that took the US-listed company private.

In the most recent deal, the North Asia-focused private equity firm acquired 442.6 million shares in the Hong Kong-listed Car Inc. from Ucar Inc., according to the Hong Kong stock exchange and media reports.

After the transaction, MBK became the second-largest shareholder in Car Inc., while Chairman Charles Lu Zhengyao cashed out of his stake in the Beijing-based rental car company for decent profits. Shares in Car Inc. have almost doubled to HK$4 on the Hong Kong stock exchange following MBK’s investment.

The transaction took place after China’s coffee chain Luckin Coffee, co-founded by the Car chairman, was delisted from the Nadaq in June due to an accounting scandal. Luckin, the coffee chain dubbed as China's Starbucks, went public on the US stock market in 2019.

MBK, founded by Michael ByungJu Kim, manages $22 billion in assets. Its Chinese office handled the latest investment in Car.

Established in 2007, Car is valued at 1 trillion won ($911 million). It earned 47 billion won in operating profit on 630 billion won in sales last year. But the company turned to a loss this year, with sales dwindling by nearly 30% in the extended pandemic era.

Its early-stage investors included Warburg Pincus, Legend Capital and US venture capital firm Kleiner Perkins.

China’s car rental service market is forecast to grow 60% to nearly 150 billion yuan ($22 billion) in 2023 from 92 billion yuan last year, with the top three players’ combined market share below 30%, according to Reuters, citing consulting firm Zhiyan and rating agency S&P.

Write to Jun-ho Cha at chacha@hankyung.com

Yeonhee Kim edited this article.

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