China Car Rental Firm eHi Weighs $1 Billion Hong Kong IPO

eHi Car Services Ltd., a Shanghai-based car rental company, is considering an initial public offering in Hong Kong that could raise about $1 billion, according to people familiar with the matter.

The formerly U.S.-listed firm is targeting a valuation of about $5 billion in the potential share sale, the people said, asking not to be identified as the matter is private. The company is working with advisers on the possible listing, which could take place as soon as next year, they said.

Deliberations are at an early stage and details such as size and valuation are subject to change, the people said. eHi Car did not immediately respond to emails or a fax seeking comment.

A listing would see eHi Car return to public markets only a few years after exiting the New York stock exchange via a deal taking the firm private. A consortium led by Chairman and Chief Executive Officer Ray Zhang bought out shareholders for $938 million in 2019.

Private equity firms including Baring Private Equity Asia Ltd., MBK Partners Ltd. and Ocean Link Partners Ltd. also participated in the consortium. Earlier this month, Seoul-based MBK completed a take-private transaction of Hong Kong-listed Car Inc., a close rival of eHi Car in China.

The rental car industry was battered by the coronavirus pandemic as travel ground to a halt. Hertz Global Holdings Inc.’s plunge into bankruptcy and stunning rebound illustrates the uncertainty about car rental companies’ prospects.

eHi Car is seeking to benchmark itself in a potential IPO against companies like Brazil’s Localiza Rent a Car SA, the people said. Localiza trades at a 37.9 price to earnings ratio on a trailing basis as of Thursday.

Founded in 2006, eHi Car offers car rentals and chauffeured services in China, according to its website. It operates in 469 cities and has a total fleet size of 69,011 vehicles as of the end of 2020, according to a bond offering document.

eHi Car reported $946 million total revenue and $7 million net loss in 2020, compared to $884 million sales and $15 million net loss in 2019, the document showed.

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