HONG KONG, July 10 U.S. private equity fund
Warburg Pincus is investing $200 million to buy an
undisclosed minority stake in privately-owned China Auto Rental
Holdings Inc, after the car rentals company pulled its U.S. IPO
in April due to market turmoil.
With IPO markets closed and financing options drying up,
cashed-up private equity firms are scouting for investment
opportunities in capital-starved companies.
The investment was China's largest ever equity financing
deal in the car rental industry, China Auto Rentals said in a
Legend Holdings, parent of China-based private equity fund
Hony Capital, and owner of computer maker Lenovo,
holds a 65 percent stake in China Auto Rental, according to
Securities and Exchange Commission filings in April.
Modelled on car hire companies in developed markets, China
Auto Rentals was the first Chinese company to attempt a New York
IPO after U.S. regulators tightened listing rules. In May, the
company cancelled plans to raise $138 million, citing "poor
The environment for Chinese stocks in the United States was
not good at present, Yao Junhong, executive vice president of
China Auto Rental, was quoted in Chinese business magazine
Caixin as saying. Yao said a weak IPO would damage the company's
future ability to raise funds.
China Auto Rental had planned to use $90 million of the IPO
funds to buy new cars and expand its fleet.