HONG KONG, July 10 (Reuters) - 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 statement.
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 market conditions”.
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.