Warburg Pincus to buy another 17.11% stake in HK-listed CAR for $145m

Warburg Pincus has entered into an agreement to purchase another 17.11 per cent stake in Hong Kong-listed car rental service provider China Auto Rental (CAR), controlled by the founder of Luckin Coffee, for a combined $145 million. The deal will make the private equity firm CAR’s largest shareholder.

Warburg Pincus’s subsidiary Amber Gem Holdings Limited sealed the agreement with UCAR Inc., a Chinese ride-hailing service provider that holds a substantial stake in the car rental business, on April 16 to acquire an aggregate of nearly 362.69 million shares in CAR, shows a regulatory filing with the Hong Kong Stock Exchange (HKEX).

According to the filing, the New York-based private equity major already bought in almost 98.61 million shares, or a 4.65 per cent stake, in CAR from UCAR at a price of HK$2.30 apiece, which translates into a transaction of HK$226.80 million ($29 million).

The remaining 264.08 million shares, or 12.46 per cent shares of CAR, are priced at HK$3.40 apiece. If the transaction is closed, the second tranche will amount to HK$897.87 million ($116 million).

Before the deal, UCAR and Warburg Pincus held approximately 25.92 per cent and 10.11 per cent shares in CAR, respectively. The transactions, once completed, will make Warburg Pincus the biggest shareholder of the firm with a 27.22 per cent stake.

The development follows a recent sharp drop of CAR’s share price as Nasdaq-listed Luckin Coffee, once Starbuck’s challenger in China, made headlines earlier this month when it announced its chief operating officer had fabricated the company sales by 2.2 billion yuan ($311 million) in the final three quarters of 2019.

Charles Lu Zhengyao, co-founder and non-executive chairman of Luckin Coffee who also founded CAR, has handed over shares in the scandal-plagued Chinese coffee chain to lenders after a company controlled by Lu’s family defaulted on a $518 million margin loan.

Warburg Pincus previously invested $200 million in CAR in July 2012, after the company shelved a $138 million U.S. offering in April 2012 due to poor market conditions.

CAR, the biggest car rental service in China, raised HK$3.4 billion in a Hong Kong initial public offering (IPO) in September 2014. At HK$8.50 apiece, shares of CAR were priced at the high end of analyst expectations after being 202 times oversubscribed.

Before the IPO, CAR raised 1.2 billion yuan ($170 million) from Chinese investment holding firm Legend Holdings in September 2010. Legend Holdings is currently its second-largest shareholder with a 26.59 per cent stake.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.