(Adds details on Rundong's business, use of proceeds)
HONG KONG, July 30 China's Rundong Automobile
Group, backed by private equity firm KKR & Co LP, said
it will launch an up to $138 million initial public offering in
Hong Kong on Thursday, betting on continued demand for luxury
vehicles in the world's second-largest economy.
The IPO will consist of 268.62 million shares in an
indicative range of HK$3.58 to HK$3.98, the company said in a
statement, valuing the deal at up to HK$1.07 billion ($138.1
The company plans to use 30 percent of the proceeds to pay
down bank loans, 20 percent for acquisitions and 19 percent to
set up eight stores for BMW and MINI vehicles in Jiangsu and
Shandong provinces and also in Shanghai.
The IPO is slated to be priced on Aug. 5, with trading of
the shares set for Aug. 12 on the Hong Kong stock exchange.
Rundong Auto, which started operating in 1998, has 51
dealerships, with 36 stores in Jiangsu province in eastern China
and the remainder in affluent coastal regions including Shanghai
and in Shandong province. Most of its stores focus on BMW cars
and other luxury brands like Jaguars and Audi, but it also sells
Ferrari and Maserati sports cars as well as other mid to
Profit jumped more than threefold to 100.2 million yuan
($16.22 million) in the three months ended in March from 29.2
million yuan in the same period in 2013, while sales grew 62.5
percent over the same period to 3.9 billion yuan, according to a
preliminary prospectus of the IPO.
For 2013, profits more than doubled to 248.4 million yuan
from 2012, while sales rose 23 percent to 11.6 billion yuan.
KKR invested $100 million in Rundong Auto in four separate
rounds between December 2010 and November 2011 and owns a 26
percent stake in the company, according to the IPO prospectus.
Bank of America Merrill Lynch and Morgan Stanley
were hired as sponsors and joint global coordinators of
the IPO, with CCB International and Haitong International also
acting as joint bookrunners.
($1 = 7.74 Hong Kong dollars)
(Reporting by Dancy Zhang; Writing by Elzio Barreto Editing by