KKR-backed Rundong Auto IPO prices at bottom of range

According to a term sheet seen by The Wall Street Journal, the company sold 268.6 million shares at HK$3.58 ($0.46) each, representing six times the company's forecast earnings for this year. The indicative range was HK$3.58 to HK$3.98. 

Shares are expected to start trading on the Hong Kong stock exchange on August 12. According to a prospectus, the company plans to use 30% percent of the proceeds to pay down bank loans, 20% for acquisitions and 19% percent to set up eight stores for BMW and MINI vehicles in Jiangsu and Shandong provinces in Eastern China and also in Shanghai.

Set up in 1998, Rundong has 51 dealerships, with 36 stores in Jiangsu and in affluent coastal regions such as Shanghai and Shandong. Most of its stores focus on luxury brands such as BMW and Jaguar, and sports cars like Ferrari and Maserati, in addition to a number of other mid to high-end brands.

KKR invested $100 million in Rundong over four separate rounds between December 2010 and November 2011. The GP will continue to hold a 26% stake in the company following the IPO. 

Rundong saw its net profit more than double to RMB248.4 million ($40.2 million) last year from RMB91 million in the previous year. Sales meanwhile rose 23.5% to RMB11.6 billion. Bank of America Merrill Lynch and Morgan Stanley have been selected as sponsors and joint global coordinators of the IPO, while CCB International and Haitong International will act as joint bookrunners.

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• Topics
• Exits
• Buyout
• Consumer
• Greater China
• KKR
• China
• Exit
• IPO
• Consumer