Cango, an online used car platform based in Shanghai, is looking to raise up to $300 million in an initial public offering (IPO) in the US, joining a list of Chinese firms seeking to tap America’s public markets for fundraising.
In its US SEC filing, the company said it plans to use the proceeds of the offering to invest in R&D capabilities, expand its sales and marketing efforts, inject capital into Shanghai Autohome to increase financing leases, and expand its automotive transaction facilitation services.
Founded in 2010, Cango claims that its platform has connected 37,600 registered dealers, 11 third-party financial institutions, online advertisers, insurance brokers, and other industry participants as of March 31, 2018. It says it has served 734,336 car buyers cumulatively since inception.
“According to the Oliver Wyman Report, we cover the largest number of new car dealers in China, and the outstanding balance of financing transactions we facilitated was the largest among automotive transaction service platforms in China as of December 31, 2017,” the company said.
The company, which plans to list on the New York Stock Exchange under the symbol CANG, booked $194 million in sales for the 12 months ended March 31, 2018. It filed confidentially on March 23, 2018, with Morgan Stanley, BofA Merrill Lynch, Goldman Sachs (Asia) as joint bookrunners.
According to global research firm iResearch, China is the world’s second-largest automotive market as measured by registered vehicles and is forecasted to become the largest automotive market by 2023.
As of the end of 2017, there were approximately 185 million registered vehicles in the country, compared with 275 million in the US.
Total used car transaction volume in China reached 12.4 million in 2017, with the ratio of the country’s used car sales to new car sales by volume at 0.5, significantly lower than 2.4 per cent in the United States.
Last month, Uxin Limited, another used car trading platform in China, filed for an IPO in the US, targeting to raise up to $500 million to boost service capabilities and fund potential investments and acquisitions.