In response to rumors that it would seek an IPO in Hong Kong, employees from Chinese car rental firm eHi said on Wednesday, “there is indeed a plan to go to Hong Kong for IPO, but the specific time has not yet been set.” The company believes the listing can help further expand its influence in the market.
Bloomberg reported on July 9 that eHi was considering a $1 billion Hong Kong IPO, coming as soon as 2022, seeking an overall valuation of $5 billion.
On July 27, Founder and CEO of eHi Zhang Ruiping expressed his positive attitude towards the company’s listing in an interview with Times Weekly, saying, “our services are provided to consumers, and listing can further expand our market and brand influence. In addition, we must also provide liquidity to investors.”
EHi Car Services in 2014 became the first Chinese car rental company to list in the United States, with an issue price of $12 and maximum fundraising of $120 million. However, the firm didn’t perform well in the US stock market. In April 2019, eHi announced that it had completed a merger with Teamsport Bidco Limited, followed by privatization and delisting. At the time of delisting, eHi’s market value was only $853 million.
One individual from eHi said that while the car rental market in the United States had developed across a span of nearly one hundred years and was very mature, car rentals in China still represented an emerging market, albeit growing at a high speed. It was unreasonable to apply the valuation method of US stocks for Chinese firm eHi.
In its 2021 semi-annual report, eHi mentioned that the domestic car rental market had fully recovered and surpassed pre-pandemic levels during the first half of this year, in terms of total orders. Especially during holiday periods, the business volume and daily activities of eHi exceeded that of the pre-pandemic period.
Founded in January 2006 and headquartered in Shanghai, eHi is one of the leading enterprises in China’s travel service industry, mainly providing services for individuals and enterprises. At present, eHi has opened more than 7,000 service locations in more than 450 cities across the country, with over 200 vehicle models and more than 70,000 vehicles for rental.
According to public information, eHi achieved total revenue of $946 million and net losses of $7 million in 2020. In 2019, its sales revenue stood at $884 million while net losses amounted to $15 million. In June 2020, eHi’s market share was 11%, while the market share of domestic competitor CAR Inc. reached 23%, with 3.26 million users, ranking first.
Wind Information shows that investors in eHi include Qiming Venture Partners, CDH Investments and Tiger Global, among which Ctrip invested $100 million in 2013.
Car Inc., eHi’s primary competitor, completed privatization and delisted from HKEX on July 8, 2021, when eHi discussed plans to go public in Hong Kong. MBK Partners, who privatized CAR Inc., is also a shareholder in eHi.