* Company to offer 426 mln new shares in HK$7.50-8.50/each
* Waddell & Reed, Hillhouse among cornerstone investors
* IPO set to be priced Sept 11, debut slated for Sept 19
(Adds industry growth forecasts, cornerstone investors)
By Elzio Barreto
HONG KONG, Sept 5 China Auto Rental Inc. on
Friday launched an up to $468 million Hong Kong initial public
offering, betting car ownership restrictions and higher spending
on travel in the world's second-largest economy will fuel demand
for hire vehicles.
The company, backed by private equity firm Warburg Pincus
and Hertz Global Holdings Inc, is offering 426 million
new shares, said a source with direct knowledge of the plans,
citing details from a term sheet.
The shares are being offered in an indicative range of
HK$7.50 to HK$8.50 each, putting the total deal at HK$3.62
billion, said the source, who was not authorised to speak
publicly on the IPO plans and declined to be named. The IPO is
set to be priced on Sept 11, with shares starting to trade on
the Hong Kong stock exchange on Sept 19.
China's car rental market is forecast to surge to 65 billion
yuan ($10.6 billion) by 2018 from 34 billion yuan in 2013, the
company said in its draft IPO prospectus citing estimates from
industry consultancy Roland Berger.
Long-term rentals of more than 90 days, which are mostly
used by corporate customers unwilling to own their own fleet,
accounts for about 60 percent of the market but are expanding at
a slower pace than short-term rentals.
China's market for short-term self-drive car rentals is
expected to grow at an average of 27 percent a year from 2013 to
2018, more than double the 13 percent growth in Brazil and far
outpacing the 6 percent expansion in the United States and 2
percent in Japan, the company said. Long term rentals are
forecast to grow 11 percent a year through the same period.
China Auto Rental, the country's largest auto rental firm,
plans to use 70 percent of the IPO 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, according to its draft IPO
It said 20 percent of the funds would be used to pay down
loans and 10 percent would be set aside for working capital.
The company received commitments worth $160 million from six
cornerstone investors, including $30 million each from U.S. fund
manager Waddell & Reed Financial Inc, Hillhouse Capital
Management, hedge fund Falcon Edge and Hertz. Davis Selected
Advisers and China Chengtong agreed to invest $20 million each.
The investment pledges should help it secure demand for the
IPO after China Auto Rental pulled a $138 million U.S. offering
in 2012, citing poor market conditions.
Credit Suisse and Morgan Stanley were hired
as joint sponsors of the IPO, with China International Capital
Corp acting as a joint global coordinator.
(1 US dollar = 7.7498 Hong Kong dollar)
(Editing by Denny Thomas, Paul Tait and Stephen Coates)