Chinese car transaction services platform targets $150m US IPO

The company intends to sell 12.5 million American Depository Shares (ADS) at $10.00-12.50 apiece, according to a filing. The size of the offering could reach 14.38 million ADS if underwriters fully exercise the overallotment option.

Warburg Pincus currently holds an 18.2% stake in Cango, having first invested RMB500 million ($75 million) in the company last July in a round that also featured Primavera Capital Group. Chinese ride-hailing player Didi Chuxing has 14.8%, while Tencent Holdings and Taikang Life Insurance own 10.7% and 5.4%, respectively. The three investors took part in a second round of funding in March, also contributing an initial RMB500 million. Didi then provided a third round with another investor in June. 

Jiayuan Lin and Xiaojun Zhang, Cango’s co-founders, collectively hold a 20.8% stake in the company. They will hold a majority voting interest after the offering due to the dual-class share structure.

Lin and Zhang helped establish SAIC-GMAC, China’s first auto finance business, in 2004. It was conceived in connection with SAIC Motor’s joint venture with General Motors and the recognition that dealerships and car buyers had financing needs that were not being met. Cango started out by providing financing solutions but then expanded into online car trading and after-market services.

As of March 2018, the platform comprised 37,667 registered dealers, 11 third-party financial institutions and 29 other industry participants, including car manufacturers, online advertisers, and insurance brokers. Cango has served 734,336 car buyers since inception. In the three months ended March, it facilitated RMB5.8 billion in financing for 97,219 new and used car purchases.

The company posted RMB1.05 billion in revenue last year, up from RMB434.3 million in 2016, while its net income rose 161.5% year-on-year to RMB349.1 million. Most of Cango’s revenue comes in the form of fees for facilitating car financing transactions. It also receives service fees from vehicle trading and after-market services.

Cango is set to become the second Chinese auto financing business to go public, following an IPO by Yixin – which spun out from Bitauto – in Hong Kong last year. Meanwhile, Uxin Group, a Chinese used car trading platform raised $225 million through a NASDAQ offering in June. The bulk of private financing in online auto services has been in the used car space, with the likes of Souche, Guazi, and Renrenche raising substantial rounds.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• IPO
• Financials
• Technology
• China
• Warburg Pincus Asia
• automobiles
• Didi Chuxing
• Tencent