Ocean Link confirms competing bid for China's eHi
Ocean Link, a travel and tourism-focused GP, has confirmed it submitted a competing bid for eHi Car Services, a Chinese car rental business that recently agreed to be privatized by a consortium comprising its chairman and other PE investors.
EHi announced on April 6 that its board had accepted a $937.5 million offer from MBK Partners, Baring Private Equity Asia, Redstone Capital Management, and Ruiping Zhang, the company’s founder and chairman. Zhang will roll over his equity into the acquisition vehicle alongside several other existing investors, while Baring has agreed to buy a 29.6% equity stake from Tiger Global Management.
An earlier filing indicated that Ocean Link, which was established with backing from Chinese online travel agency Ctrip, another eHi shareholder, had bought a 6.5% interest in the company from CDH Investments for $66.3 million. This was done in support of a separate take-private bid of $14.50 per American Depository Share (ADS), superior to the $13.50 per share offered by the other group.
Ocean Link said on April 9 that it had formed a consortium with Ctrip to try and buy eHi. It added that other existing shareholders, including management team members, were welcome to join.
As of March 2017, Ctrip had a 13.9% equity stake in eHi, while Crawford and Tiger Global had 13.4% and 11.9%, respectively. CDH, Goldman Sachs, Ignition Partners, and Qiming Venture Partners, all of which invested in the company prior to its 2014 IPO, had smaller holdings. Hedge fund SRS Partners is another significant investor, having participated alongside Tiger Global in a $134 million share placement in 2015.
EHi was founded in 2006 and has grown into a network of more than 2,500 service centers across 200 cities with in excess of 40,000 vehicles. The company offers individual car rentals and partners with businesses that operate in China, with both self-drive and chauffeured car options available. Revenue for 2016 came to RMB2.11 billion ($335.7 million), up from RMB1.45 billion the previous year. Over the same period, net profit fell from RMB696.3 million to RMB33.1 million.
Ocean Link invests across the value chain and sub-verticals of the travel and leisure sectors, including online and offline travel services, hotels and resorts, destination services and entertainment, and related technology and business solutions providers. The firm raised $300 million for its debut US dollar-denominated fund and is looking to raise the same amount for a renminbi vehicle. Ctrip is an anchor investor in both funds and holds a small minority stake in the GP.
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