China: Auto marketplace TuanChe scales back US IPO target to $34m

TuanChe

Beijing-based TuanChe, an omnichannel automotive marketplace in China, has trimmed its US initial public offering (IPO) target from $150 million to $34 million by offering 4 million American Depositary Receipts (ADR), according to its amended SEC filing.

TuanChe has priced its ADR at a range of $7.50 to $9.50, which would give the company a fully diluted market value of $591 million and an enterprise value of $548 million at the midpoint of the proposed range.

Founded in 2010, TuanChe operates online platform tuanche.com that matches prospective car buyers with auto dealers. It also has an online used car auction platform, a WeChat mini-program, and mobile applications.

“Together, these channels promote our offline events and serve as a consumer acquisition tool for our offline events and for the secondary dealers using our virtual dealership services,” the company said.

In its filing, TuanChe, which has applied to list its ADRs on the Nasdaq Global Market under the symbol “TC”, said its existing investors – Honour Depot Limited, BAI GmbH, and K2 Partners II LP – have committed to purchase a total of $15 million ADS in the IPO.

The Beijing-based company has identified Maxim Group LLC and AMTD Asset Management as the joint bookrunners of the IPO.

The company said it will use the proceeds of its IPO for the development and expansion of its business, strengthening its information technologies and data analytics capabilities, and for general corporate purposes.

It has reported revenue of $40.7 million and its net loss narrowed to $3.2 million in the six months through June 2018. In addition, it posted revenue of $42.4 million and a net loss of $13.7 million for the full year of 2017.

TuanChe expressed confidence on the growth of the business given that China is the second largest automobile market in the world with 185 million car parc, or the total number of cars in a region at a specific time, as of December 2017.

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