Produced | Tiger Sniff Business Group
Author | Li Ling
On April 18, 2020, Shenzhou Car Rental officially changed ownership.
The decision to “sell yourself” was finalized at the eighth meeting of the second board of directors of UCAR. Of the 7 board members, 5 agreed, 1 opposed, and 1 director abstained from voting.
The meeting was chaired by Lu Zhengyao, CEO of UCAR. He recently reviewed and passed the relevant bill on the sale of car rental assets in China. In the voting results, in addition to a vote against the Shenzhou car rental “selling body” proposal, another person did not vote because of different views on the procedures of the board meeting.
It is not important who cast a negative vote at the last minute. Like Baowo ’s reorganization proposal, it has not passed the perfect seven votes, and it does not affect the result. The new major shareholder of China Rent a Car changed from China Excellent Car to Amber Gem Holdings Limited.
Amber Gem is a subsidiary of Huaping Investment. Before the capital increase, Amber Gem and China Automobile held approximately 10.11% and 25.92% equity of China Auto Rental, respectively. After the transaction was completed, Amber Gem’s shareholding ratio became 27.22%, and the shareholding ratio of the China Department dropped significantly.
On April 22, the Hong Kong Stock Exchange disclosed that American private equity firm Huaping Investment completed the acquisition of the Shenzhou Car Rental Co., Ltd. held by China UCAR and became the largest shareholder of China Car Rental.
Shenzhou Car Rental Clarification Announcement: The second batch of acquisitions has not been completed
Some people lamented that the 14-year-old car rental in China has become a “child of someone else”. However, as far as the current situation is concerned, whether the car rental in China can step on “other people’s home” with both feet, there are still variables.
Mr. Key Li Hui
On April 21st, China Automobile released an announcement to sell assets, and China Auto Rental “finished the sale” was finalized.
Hua Ping Investment divided the transaction into two. The first batch acquired 98.6 million shares of Shenzhou Car Rental at a price of 2.30 Hong Kong dollars per share, which accounted for approximately 4.65% of the shares, and the transaction amount was 227 million Hong Kong dollars; It approved the purchase of up to 264 million shares at a price of 3.40 Hong Kong dollars per share, with a shareholding limit of 12.46%.
Affected by this, Shenzhou Car Rental finally got rid of Ruixing’s counterfeiting and entered the rising channel. As of the close of April 23, the stock price of China Car Rental rose from a low of 1.2 Hong Kong dollars on April 3 to 2.9 Hong Kong dollars, an increase of up to 142%.
Hua Ping Investment is actually not an outsider. Lu Zhengyao once said that before the listing of Shenzhou Car Rental, in addition to sending free and part-time CFOs, Huaping Investment also supplemented the basic homework for listing.
The story of the China Department and Huaping Investment begins with this key man, Li Hui.
Li Hui ’s resume is pretty. In 2001, he joined Goldman Sachs (Asia) as an executive director and soon became Morgan Stanley Asia Limited as vice president. In 2002, Li Hui joined the Huaping Investment in the United States, mainly responsible for the China business of Huaping Investment.
Since entering China in 1994, Huaping has invested in nearly 100 companies. Under the leadership of Li Hui, it has invested in now-known giants such as R & F Properties, Intime Department Store, Zhongtong Express, 58 Tongcheng, etc.
Of course, the China Department is also a highlight of Li Hui ’s layout in the field of Huaping ’s investment and travel. In July 2012, Huaping invested 200 million yuan to participate in the round B financing of car rental in China. In addition to car rentals in Shenzhou and special cars in China, Huaping Investment also invested in Mobike, Weilai Automobile, Baturu and other upstream and downstream companies.
As one of the companies in Warping’s investment layout, car rental in China has its own particularity.
In February 2016, Li Hui formally left Huaping Investment, and Title at that time was the head of Huaping Capital China. Two months later, Li Hui quickly joined China Automobile as the vice chairman, responsible for strategy and capital operation.
On June 5, 2017, Li Hui resigned as the vice chairman of China UCAR. In February of the same year, Li Hui had founded Dazheng Capital and participated in the round A and B round financing of Ruixing Coffee with a total of US $ 180 million.
Hua Ping Investment is not a pick-up man
As an early investment agency for car rental in China, Huaping Investment has entered the market early, which means that it has made a lot of money.
It took less than one year to send the car rental in China to the Hong Kong Stock Exchange. On May 28, 2015, Amber Gem (that is, Huaping Investment), the majority shareholder who held 18.17% of the shares, immediately sold more than 30% of its holding China’s car rental stocks. A total of 168 million shares were cashed in at HK $ 3.108 billion.
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Although the history of the share price of car rental in China, it is as tragic as the peak without being listed, but it is also a downward trend that has been suppressing the upward trend for a long time. It happened that in May 2015, the stock price of China Car Rental started a continuous rising mode, and reached the historical high of 22 Hong Kong dollars on the 20th of the month. Eight days later, Huaping Investment announced that it would sell 7.09% of the shares of China Car Rental to a third party at a price of 18.5 Hong Kong dollars per share.
After the high-point cash-out transaction, Huaping Investment ’s shareholding in car rental in China fell to 11.08%. According to the pre-trading shareholding ratio of 10.11% recently announced by China Car Rental, it can be estimated that Huaping Investment also sold 0.97% of China Car Rental stocks after cashing out in 2015.
However, since the first cash out, the stock price of Shenzhou Rent-a-Car has continued to fall until it fell below HK $ 10 in January 2016. Zhirui Xing’s counterfeit incident occurred, and the stock price of car rental in China reached a historical low of 1.2 Hong Kong dollars. Therefore, no matter when the Warburg investment is sold, its income is difficult to compare with the first sell-off.
This time is different. In 2015, Huaping Investment used 168 million shares of Shenzhou Car Rental to cash out 3.108 billion Hong Kong dollars. In 2020, Huaping Investment used 1.126 billion Hong Kong dollars to buy Shenzhou Car Rental for about 3.6100 million shares (98.6 million shares + 264 million shares). Combining the two transactions, Warburg Investment sells at a high point and buys at a low point. This transaction is profitable, and it is really untenable to say that it is a “cart take”.
Even looking at the dive car rental in Shenzhou, the operation of Huaping Investment is still full of vigilance while leaving behind.
For the second batch of equity transactions with an upper limit of 12.46%, Huaping Investment has an “insurance treaty”, that is, only the statements and guarantees provided by “China Automobile” have no major violations or false; The agreement will take effect only if there are no major adverse changes in the business.
The latest announcement of Shenzhou Car Rental said that the second batch of share acquisition delivery is subject to certain conditions, and the acquisition has not yet been completed. In other words, this seemingly stable transaction is full of variables. Once the above problem occurs in the car rental in China, whether it is to invest in the China Department of selling assets or to invest in the low-cost bargaining of Huaping, the vested benefits of both sides will be beaten.
Can the new owner solve the debt?
At least from the perspective of stock price performance, the capital market is quite satisfied with the operation of swapping out new major shareholders. But even if you change Huaping Investment, can you carry the huge debt of car rental in China?
Shenzhou Car Rental Announcement shows that “selling yourself” is to optimize the company’s debt structure and protect the company’s funds. But the bottom-line purchase of the majority shareholder does not seem to alleviate the debt pressure of car rental in China.
On April 22, UCAR released an announcement on the sale of assets and related transactions, and it plans to transfer all the equity of Hebei Happiness Consumer Finance Co., Ltd. held by the affiliated company, UCAR Industrial Fund, accounting for 39.25% of the shares. The estimated total transfer price is 250 million yuan.
The largest shareholder of Fujian UCAR Fund is ICBC Credit Suisse Investment Management Co., Ltd., with a shareholding of 46.13%, and China UCAR with a 30.75% share ranks second. Founded in 2017, Hebei Happiness Consumer Finance is aimed at consumer credit in the microfinance market. The major shareholder is Hebei Zhangjiakou Bank, which holds 47.10% of the shares, and China Automobile ’s 39.25% of shares also ranks second.
The announcement states that the transaction agreement was signed on April 20, and the transferee will pay the estimated transfer consideration in cash within 3 days. Interestingly, the actual controller of Fujian UCAR Fund is Li Hui mentioned above. This agreement also has a clause similar to an “insurance contract”: when the transfer of shares is evaluated above or below the estimated value, both parties need to “more reimbursement less.”
In order to raise money, this old car rental company really has no temper.
After the car rental in China was exposed to seek “to sell their bodies, the two gossip buyers quickly clarified that this was not the case. The CEO of Geely Automobile even refused to say that,” We have no interest in acquiring such a company. “
The Chinese Department has no time to estimate the disdain between friends and businessmen. Since April, the Chinese car has received two inquiries.
As of June 30, 2019, the monetary capital on the China Automobile account is about 758 million yuan, and the short-term loan reached 2.063 billion yuan. Whether there is a concentration of debt repayment and the risk that the debt will not be repaid when due.
Shenzhou Uche replied that in the next 12 months, it needs to repay a large amount of debt, but combined with the company ’s current book cash and liquidity, there is no risk that the debt will not be repaid. The biggest burden Beijing Baowo has reached a debt restructuring arrangement with Beiqi Foton, and debt repayment pressure will be greatly eased.
The above questions are only mentioned in the enquiry letter, and the Chinese state is a small part of the intertwined interests.
Lu Zhengyao and other “successors”, Shenzhou car rental and other saviors. It is unclear whether the major shareholder who is about to be renewed will meet the difficulties and become the savior to unlock the debt bureau of Shenzhou Car Rental, or just wait for the opportunity to come up with the “catch man”.
Announcement with reply to inquiries:
Shenzhou UCAR: Announcement on Reply to Inquiry Letter of National SME Share Transfer System