eHi Car Services Ltd. (NYSE: EHIC) has announced that its initial public offering (IPO) of 10 million American depositary shares (ADSs) are expected to enter the market Tuesday morning. Each ADS, originally priced at $12, will represent two Class A common shares of eHi.
The underwriters for the offering are J.P. Morgan, Goldman Sachs and Deutsch Bank. The underwriters have been granted a 30-day over-allotment option to purchase up to an additional 1.5 million ADSs from the company.
In the press release the company said:
The Company expects to receive gross proceeds of approximately $120.0 million from the offering at closing, assuming the underwriters do not exercise their option to purchase additional ADSs, and additional gross proceeds of approximately $50.0 million from the issuance of 5,000,000 Class A common shares to Dongfeng Asset Management Co. Ltd., 1,666,666 Class A common shares to China Universal Asset Management Co., Ltd., and 1,666,666 Class A common shares to Ctrip at $6.00 per Class A common share (equivalent to $12.00 per ADS) in private placements concurrent with the closing of the offering.
eHi is a leading car rental and car services provider in China, in terms of market share by revenues in 2013, according to Frost & Sullivan. The company operates 760 service locations in 90 cities across China.
From January 2012 to June 2014, the fleet size increased from 7,717 to 15,409, while eHi Car Services has generally maintained a car rental fleet utilization rate of more than 70% during the same period.
As of the end of June 2014, there were more than 550,000 registered members for car rentals and over 32,000 corporate clients for car services.
In fiscal year 2013, total annual net revenues increased to $91.3 million (all dollar amounts were converted from renminbi), representing a growth rate of 25.8%. Total net revenues increased to $62.0 million for the six months ending in June, representing a growth rate of 47.5%. The company has incurred net losses of $24.5 million in fiscal year 2013 and $3.3 million in the six months ending in June.
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