KKR-backed Rundong drops on HK debut

The stock fell to HK$3.01 in early morning trading before rising to close at HK$3.57, just shy of the HK$3.58 per share offer price. The offer price was set at the bottom of the indicative range.

As of mid-afternoon trading on Wednesday, the stock was at HK$3.49, down 2.24%.

The retail portion of the IPO is understood to have received a lukewarm response from investors while the institutional tranche was only moderately oversubscribed. Rundong sold 244.97 million new shares, while shareholder Runda PTC offloaded 23.65 million existing shares.

Set up in 1998, Rundong has 51 dealerships, with 36 stores in Jiangsu and in affluent coastal regions such as Shanghai and Shandong. Most of its stores focus on luxury brands such as BMW and Jaguar, and sports cars like Ferrari and Maserati, in addition to a number of other mid to high-end brands.

KKR invested $100 million in Rundong over four separate rounds, between December 2010 and November 2011, in exchange for a 33.8% stake. As a result of new shares offered in the IPO, the GP's interest has been diluted to 26%.

According to the prospectus, Rundong plans to use 30% of the IPO proceeds to pay down bank loans, 20% for acquisitions and 19% percent to set up eight stores for BMW and MINI vehicles in Jiangsu and Shandong provinces in Eastern China and also in Shanghai.

Rundong saw its net profit more than double to RMB248.4 million ($40.2 million) last year from RMB91 million in the previous year. Sales meanwhile rose 23.5% to RMB11.6 billion. Bank of America Merrill Lynch and Morgan Stanley acted as sponsors and joint global coordinators of the IPO, while CCB International and Haitong International acted as joint bookrunners. 

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• Topics
• Consumer
• Greater China
• Exits
• KKR
• China
• Consumer
• IPO
• Exit
• automobiles