Tuhu Car, an automotive-services company backed by Chinese technology giant Tencent Holdings, is expected to price its initial public offering (IPO) at the bottom of its marketed range, according to sources. The Shanghai-based company is set to price its shares at 28 Hong Kong dollars each, raising approximately $145.5 million. The IPO took orders from investors until Tuesday, and shares are scheduled to commence trading in Hong Kong on September 26.
Providing Comprehensive Automotive Services
Tuhu Car offers a wide range of services to car owners in China. This includes replacements for tires and chassis parts, as well as maintenance, repair, and detailing services. Operating both online and offline, Tuhu Car caters to the needs of its 17.1 million transacting users over the course of 12 months ending in March. Despite recording a loss of $38.2 million on revenue of $447.7 million in the first quarter, Tuhu Car remains a strong contender in the automotive-services industry.
Notable Investors and IPO Details
In addition to Tencent Holdings, Tuhu Car is supported by prominent backers such as Carlyle Group and Sequoia China. While the company had initially planned to raise up to $400 million from its IPO last year, it aims to raise less than half of that amount this week. However, despite the reduced target, Tuhu Car has still attracted interest from global long-term investors.
Market Conditions and Cornerstone Investors
Tuhu Car’s IPO comes at a time when the Hong Kong market is cautiously awaiting bigger deals, with six companies launching IPOs in the past week. To mitigate risks, about 60% of Tuhu Car’s shares on offer will be allocated to cornerstone investors who commit in advance to buying portions of the deal at the listing price. Notable cornerstone investors for Tuhu Car include Zhejiang Leapmotor Technology and Gotion High-Tech, both prominent players in the automotive industry.
In conclusion, Tuhu Car’s IPO is expected to garner significant attention as it enters the Hong Kong market, despite the challenging global economic climate and diminished investor sentiment towards Chinese stocks.