Standard Chartered banks on China's auto industry - source

Sunfonda is one of the PRC's largest luxury automobile dealership groups in the country's Western region. It manages dealership outlets in several inland provinces.

The investment comes as Chinese buyers have placed increasing emphasis on the market's consumer luxury segment, which includes China's auto sector. The industry has attracted private equity investors including General Atlantic, which had taken a 15% stake in dealership Zhongsheng Group, and TPG, which backed China Grand Auto. Meanwhile, sovereign wealth funds China Investment Corp. (CIC), the Government of Singapore Investment Corp. (GIC) and Temasek Holdings each held stakes in another automobile dealer, China Zhengtong Corp.

Yet, despite the hype surrounding the auto sector, Zhongsheng saw a lackluster IPO in 2010, which was attributed to choppy market conditions. In March of last year, Zhongshen specifically priced its Hong Kong IPO close to the bottom of its range, with a yield of $369 million after initially planning an $800 million-$1 billion raise. Yet, just one month later, China Grand Auto announced that it also sought a $1 billion raise.

China is currently the largest automobile market in the world, although penetration remains approximately 1/15th that of the United States.

Director at Standard Chartered PE Bert Kwan declined comment.

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• Topics
• Greater China
• Consumer
• Investments
• Standard Chartered Private Equity