eHi Car Services, a Chinese car rental service with a 15,000+ vehicle fleet in over 90 cities, filed on Friday with the SEC to raise up to $100 million in an initial public offering.
eHi Car Services provides both car rentals (70% of 1H14 revenue) and car services (30%). Between 2009 and 2013, China's car rental market grew at a 30% CAGR to $4.3 billion, and it is expected to grow to $8.2 billion (18% CAGR) by 2017. It notes the high market fragmentation in China; the top three players have an 11% market share compared to 95% in the US, 48% in Korea and 32% in Japan.
Primary shareholders include Ctrip (NASDAQ: CTRP; 23% pre-IPO stake), Enterprise Rent-a-Car (22%), CDH Investments (13%), Qiming Venture Partners (12%), Goldman Sachs (11%), founder and CEO Ray Zhang (10%) and Ignition Group (9%). eHi claims that Enterprise shares its operational and industry experience with the company. It also leverages its partnership with Ctrip; the travel agency has integrated eHi's online reservation system on its website since May 2012 and its mobile application since June 2014.
Revenue increased 48% to $62 million for the six months ended June 30, 2014. eHi Car Services' fleet size at quarter-end jumped to 15,400 from 10,600 one year ago and average revenue per available car rose 6% to $26 per day. It also increased its fleet utilization rate by 250 bps to 71%, primarily due to repairs and maintenance during the 1H13. Adjusted EBITDA almost tripled to $21 million due to revenue growth and operating leverage, including lower spending on sales and marketing as well as general and administrative expenses. The company had $143 million of debt at quarter-end (4.7x LTM adjusted EBITDA).
The Shanghai, China-based company, which was founded in 2006 and booked $111 million in sales for the 12 months ended June 30, 2014, plans to list on the NYSE under the symbol EHIC. eHi Car Services initially filed confidentially on June 30, 2014. J.P. Morgan, Goldman Sachs (Asia) and Deutsche Bank are the joint bookrunners on the deal. No pricing terms were disclosed.
