China’s used car trading platform Uxin raising $230m via convertible notes

Sports utility vehicles (SUVs) waiting to be exported are seen at a port in Lianyungang, Jiangsu province, China April 5, 2018. REUTERS/Stringer/Files

Uxin Limited, a Chinese used car trading platform that raised $225 million from its public offering on the Nasdaq last year, is roping in additional investors by issuing $230 million worth of convertible notes through a private placement, the company said in a disclosure.

The Beijing-based company said it has entered into a convertible note purchase agreement with the affiliates of 58.com, Warburg Pincus, TPG, and other investors, giving each of the new investors the right to nominate one director to the company’s board of directors upon closing of the transaction.

The convertible notes will bear interest at a rate of 3.7 per cent per annum from the issuance date and will mature in five years. Each note will be convertible into Class A ordinary shares of the company at a conversion price of $1.03 per share or $3.09 per American depositary share at the holder’s option after a 180-day period

Uxin said it will use the proceeds from the offering to strengthen its cross-regional car transactions, which is the company’s new area of focus.

As part of the deal, Uxin will enter into a strategic cooperation with 58.com, which is considered as China’s version of Craigslist, in the areas including traffic and inventory acquisition, used-car inspections, big data analysis, and Saa, said Uxin founder, chairman and CEO Kun Dai.

58.com chairman and CEO Michael Yao said its online used car platform, 58 Used Car, will benefit from Uxin’s “tremendous offline transaction-related expertise”.

“By jointly integrating our online and offline services, we will be ideally positioned to significantly enhance the user experience for purchasing used cars and drive greater efficiency in this growing market,” Yao said.

Last year, Uxin, which means quality and trust in Chinese, raised $225 million by selling 25 million shares in its flotation, lower than its initial target of $500 million. Its business is composed of Uxin Used Car, which caters to consumer buyers, and Uxin Auction, which caters to business buyers.

The company booked $2.3 billion in sales for the 12 months ended March 31, 2018. In January 2018, Uxin raised $500 million in a Series D round from investors that include Warburg Pincus, TPG, and Jeneration Capital. An earlier $170-million Series C round was led by Baidu in 2015.

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.