Joy, Nio Capital invest $315m in China online used car dealer

Uxin listed in the US in 2018, but it raised around $1 billion in private funding during the four years prior to that and several of those investors retain interests. Two of them, TPG and Warburg Pincus, participated in a $230 million convertible note issue in 2019. They have agreed to convert their $69 million portion into ordinary shares alongside the commitment from Joy and Nio.

The company’s stock hit a two-and-a-half-year high of $5.81 on June 15, the day the new investment was announced. It closed at $4.27 and was around $3.90 as of early afternoon trading on June 16. Uxin hasn’t surpassed its IPO price of $9.00 since the days immediately after the offering.

The company was established in 2011 by a group of former executives at auto listings provider Bitauto. In addition to TPG and Warburg Pincus, early backers included Legend Capital, DCM, BAI, Tiger Global Management, KKR, Baidu, Coatue Management, Hillhouse Capital, China Vision Capital, Huasheng Capital, and Jeneration Capital.

Until last year, the business comprised two strands: a 2B auction platform aimed at small-scale dealers, and a 2C operation that promised a one-stop car-buying experience spanning recommendations, financing, title transfer, and delivery. Revenue came from commissions on transactions as well as fees for the provision of value-added services.

However, the 2B platform was sold to domestic listings giant 58.com in March 2020. Uxin also offloaded its loan facilitation and car salvage businesses.

Concentrating on the 2C segment – the 2B divestment was the culmination of this effort, not the beginning – has delivered significant growth. In 2019, the company facilitated 97,100 transactions with total gross merchandise value (GMV) of RMB11.3 billion, in each case a more than 150% year-on-year increase. Revenue rose 141% to RMB1.59 billion and the net loss from continuing operations was roughly flat at RMB1.33 billion.

Performance in 2020 – figures for the financial year ended March 2021 have yet to be disclosed – was shaped by COVID-19: a poor first three months followed by a steady rebound. At the same time, Uxin embarked on its strategic transition to an inventory-owning model, which is intended to deliver stronger control of services and supply chain. The company points to an increase in its net promoter score as evidence of improved customer experience.

“We are excited about the used car market in China and have continuously searched for attractive investment opportunities,” said Erhai Liu, founding and managing partner of Joy, in a statement.

“After almost a decade of experience in this sector, Uxin has made remarkable progress despite experiencing challenging times. All along, the commitment and persistence of Uxin’s management team have impressed us. Uxin’s solid brand and reputation, along with its strategic direction following the business transformation, will lead to its continued success.”

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• Topics
• Greater China
• Technology
• PIPEs
• China
• TMT
• automobiles
• Joy Capital
• Nio Capital
• TPG Capital
• Warburg Pincus Asia