Warburg Pincus, Legend re-up in China chauffeur service Ucar

CAR, which is backed by Warburg Pincus and Legend Holdings, said in a filing that it would subscribe to 443,263 Series B preferred shares in Ucar for a total consideration of $50 million. The Hong Kong-listed company held a 10% stake in Ucar - on a fully converted basis - following the $250 million Series A round in July. Due to its smaller relative contribution to the Series B, this holding will be diluted to 9.85%.

CAR has a longstanding relationship with Ucar. The wife of Charles Lu, chairman and CEO of CAR, holds a 22.4% stake in the company through Haode Investment. Eastrock Capital Partners Fund I, which is 38%-owned by Lu's nephew, has a 24% interest in Ucar. Haode also has a 12.89% stake in CAR.

China's online taxi-booking platforms offer convenience but also an element of risk. Services like Didi Kuadi and Uber treat their drivers as contractors rather than employees, which limits the amount of vetting they can do. By employing its own drivers and rents its own cars rather than rely on crowd-sourcing drivers who provide their personal vehicles, Ucar addresses these safety concerns directly.

CAR entered into a co-branding arrangement with Ucar earlier this year, enabling the smaller company to rent its high-end vehicles. "They rent cars from us long-term, from three years to five years, and also they rent cars from us during the weekdays when our utilization rates are relatively low," Emily Paau, director of investor relations at CAR, told AVCJ in July.

When the Series A round took place Ucar was operating in 60 cities across China. It posted a net loss of RMB38.2 million ($6.2 million) last year.

EHi Car Services, China's second-largest car rental provider after CAR, is pursuing a similar strategy to its rival. It invested $25 million in Kuaidi Dache last year, ahead of the merger with Didi Dache, and agreed to make its premium car services available through the Kuadi platform. This supports Didi Kuaidi's push into private car booking services, offering a variety of services in China much like Uber.

CAR received backing from Legend Capital in 2010 and the following year Legend Holdings made a strategic investment of approximately RMB207.8 million. Warburg Pincus committed $200 million to CAR in 2012 and Hertz subsequently came in with a $100 million investment. CAR raised $467 million through its Hong Kong IPO in September 2014.

Warburg Pincus completed a partial exit from CAR in May. The GP's other interests in China's online-to-offline auto services space include second-hand car-trading platform Uxin and designated driver service eDaijia.

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• Topics
• Expansion
• Greater China
• Technology
• China
• Warburg Pincus Asia
• Legend Capital
• Growth capital
• TMT
• Transportation