PE-linked SPAC to merge with China ride-hailing business
A special purpose acquisition company (SPAC) led by two Chinese private equity investors has agreed to merge with local ride-hailing business Wanshun Technology Industrial Group in a deal that values the target at approximately USD 300m.
AVCJ Research has no record of prior private funding by Wanshun. The Shenzhen-based company, which was established in 2016, operates a peer-to-peer marketplace for app-based on-demand ride-hailing services, relying on a pool of around 5.8m registered drivers.
Wanshun claims to ensure a high level of driver loyalty through subscription plans as well as the traditional commission-based fee structure, according to a statement. It is also building a complementary offline ecosystem by pushing into electric vehicle (EV) sales and related services and providing a network of physical stores to serve new and existing drivers.
The SPAC, AlphaVest Acquisition Corp, raised USD 69m through a NASDAQ offering in December 2022. The sponsor entity is majority-owned by Peace Capital, a private equity firm controlled by Pengfei Zheng, who is also chairman of the SPAC’s board. In addition to Peace Capital, which he established in late 2021, Zheng is the founder and president of local GP Shenzhen Guoxing Capital.
The SPAC’s CEO is David Yan, a partner at Shanghai-based V-Stone Capital. His duties include overseeing fundraising and investments in financial technology, blockchain, big data, and healthcare. Before that, Yan worked for Hubei Hongtai Industrial Investment Fund and Fosun Group.
Beyond the headline valuation, no information was given on the structure of the merger or the financial performance of Wanshun. The amount of capital accruing to the merged entity will be dictated by how many SPAC shareholders elect to redeem their shares for cash on completion of the deal instead of exercising their warrants and purchasing shares.
“AlphaVest recognises the significant opportunity within Wanshun’s distinctive business model and recent launches of new growth initiatives, which created a vibrant synergy within its business ecosystem,” said Yan.
Didi is the dominant force in China’s ride-hailing space, but the company ran into trouble in 2021 with the launch of an investigation into its US IPO, which led to a temporary ban on new user registrations and app downloads. Several rival platforms – such as T3 Go and Caocao Chuxing – seized on this perceived weakness and raised bumper funding rounds.
More recently, T3 secured CNY 1bn (USD 140m) in an extended Series A round and Ruiqi Mobility closed a CNY 842m Series C. What these companies have in common is significant strategic backing. FAW Group, Dongfeng Motor, and Changan Auto are investors in T3, while Ruiqi and Caocao are controlled by GAC Group and Geely, respectively.
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