China auto trading platform Souche gets $180m Series D

Hong Kong-based VMS Investment Group, ClearVue Partners, Zuoyu Capital, Haitong International, CreditEase and Morningside Venture Capital also participated. Local wealth management player CreditEase committed capital from one of its dedicated financial technology-focused funds.

Morningside and Ferry Venture Capital provided Souche’s Series A round in January 2013, according to AVCJ Research. A Series B of more than $10 million followed in September of the same year, led by Sequoia Capital China. The two existing investors also re-upped.

Founded in 2012, Souche claims to be China’s largest second-hand auto transaction service provider. It operates a software-as-a-service (SaaS) system that connects over 80% of the country’s offline used car dealerships. In 2016, the company facilitated transactions involving more than 513,000 automobiles with a cumulative value of around $10 billion. Souche receives a commission on each transaction.

Ant Financial, Alibaba Group’s financial services affiliate, and car rental services provider Ucar led the Series C round last November. As part of that deal, Souche launched a credit-based vehicle financing product called Tangeche in conjunction with Ant Financial. It is based on credit data and financial services from Ant Financial’s online banking affiliate MyBank and Souche’s design and marketing skills.

Described as the first lease-to-buy car purchase model in China, Tangeche offers flexible-term financing solutions and down-payments as low as 10%. The objective is to enable more young people to buy cars and bring new customers to dealers that use the Souche platform. There were 183 million cars in China as of year-end 2016, up from 63 million in 2009. The total is expected to reach 200 million by 2020, which would see China surpass the US as the world’s largest car market.

The latest funding will be used to improve Souche’s technological capabilities, develop its auto trading and financial services platform, and enhance services for second-hand car dealers. There will also be increased investment in Tangeche, with a view to achieving 100,000 transactions by the end of the year.

“Souche equips the auto dealers with much-needed marketing, transactional and fianancial management capabilities. With more and more diversified and targeted auto financing services by the company, Souche is quickly buidling an innovative auto financing service platform combining online and offline resources,” Michael Chen, a managing director at Warburg Pincus, said in a statement.

A host of Chinese used car trading platforms have secured PE and VC backing, but these start-ups place differing levels of emphasis on the B2B, B2C, C2C and C2B markets. They tailor their services accordingly, with Souche emphasizing auto financing and dealer services, while others concentrate on listings and auctions.

There have been several sizeable rounds in the last six months, ranging from Mychebao.com’s $100 million Series C led by PAG Asia Capital to Uxin’s $500 million round led by TPG Growth, Jeneration Capital and China Vision Capital. Other companies receiving funding during this period include Che300.com, Guazi.com, Renrenche and Tiantian Paiche.

Warburg Pincus is an investor in Uxin and the private equity firm has also backed Ucar and China Auto Rental (CAR), which has a longstanding relationship with Ucar. Designated driver service eDaijia and bicycle-sharing start-up Mobike are among its other transportation investments. Warburg Pincus closed its first dedicated China fund, which invests alongside the firm’s global vehicle, at the hard cap of $2 billion last December.

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• Topics
• Greater China
• Expansion
• Technology
• China
• Warburg Pincus Asia
• TMT
• automobiles
• Venture
• Growth capital