China second-hand car trading platform Chemao raises $188m
Chemao.com, a Chinese second-hand car trading platform, has raised RMB1.2 billion ($188 million) in a Series B round of funding led by Shenzhen-listed hydropower equipment maker Zhefu Holding Group.
Shanghai-based wealth management firm Jiuhui Assets and existing investor Yuanjing Capital also participated. According to an internal email obtained by Chinese media, Yuanjing is a venture capital fund set up by Alibaba Group's co-founders.
Chemao was founded in 2012 by former Alibaba employee Wei Huang. The company focuses on providing vehicle inspection services for used cars that are then listed on its online platform. Services currently cover Hangzhou, Wenzhou, Beijing and Shanghai. Last December, the company raised RMB30 million from Yuanjing.
Guangyu Han, co-founder of Chemao, said the company will use about RMB200 million of the new investment to scale up its business nationwide. It plans to expand into 15 Chinese cities by the end of this year. By 2016, Chemao aims to be in 50 cities, opening 500 automobile authentication centers. The bulk of the remaining RMB1 billion has been earmarked for automotive finance. The company wants to provide financial products for car deals and buyers.
China's used car market has drawn increasingly interest from PE and strategic investors. Last week, Youche.com raised an $18.2 million Series B round led by Galaxy Capital, followed by IDG Capital Partners, ZhenFund and China Growth Capital. Meanwhile, JD Capital and Addor Capital led a RMB300 million Series B round for Mychebao.com and Tencent Holdings led an $85 million Series C round for Renrenche.com.
Earlier this year, KKR teamed up with search giant Baidu and US-based hedge fund sponsor Coatue to invest $170 million in Uxin, a Chinese online used car auction company best known for B2B platform Youxinpai.
Most of the investment has targeted the B2B and B2C segments: wholesalers and dealerships trading used vehicles amongst themselves, and dealerships selling cars on to the next owners. The C2B segment - whereby consumers sell vehicles to wholesalers - is less penetrated.
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