HongKong – On July 5, CAR Inc said in a statement that offeror Indigo Glamour Co Ltd, a subsidiary of MBK Partners, completed the compulsory acquisition of all remaining offer shares of the company. MBK Partners expected the privatization of CAR Inc to be concluded on July 8.
After the privatization deal wraps up, MBK Partners will hold a 100% stake of CAR Inc. The deal will further consolidate the capital structure of CAR Inc, making it one of the core assets in MBK’s growing portfolio in Asia.
The privatization deal is valued at approximately US$1.1 billion and it’s the biggest recent investment made by MBK.
Collaboration for a brighter future
CAR Inc’s leadership in China’s car rental market and its resilient business performance are key drivers behind MBK Partner’s investment, while MBK’s capital strength and industry expertise are expected to support CAR Inc in pursuing business growth in the future.
The deal between the two companies will tap each other’s strengths in gearing up transformation of the car rental market in China.
MBK Partners is one of the largest independent private equity funds in North Asia, with more than US$24 billion of capital under management. Particularly, it also has a strong track record in investing in the car rental industry and leading industry-wide consolidation.
CAR Inc, which was established over a decade ago, has been a leader in China’s car rental market for a long time. It now captures a 23% share of the entire domestic car rental market. Compared with its peer companies, CAR Inc has strong advantages in terms of user number, fleet size, brand awareness, and service quality.
The privatization deal will help CAR Inc further consolidate its leading position in the car rental market, and also leverage MBK’s capital strength and insights to improve CAR Inc’s business structure and models to gear up transformation and grab a larger market share. With MBK’s involvement, CAR Inc’s financing channels will be further diversified and reinforced, while the market confidence in the company will be further boosted.
According to publicly available information, Indigo Glamour Co Ltd is a subsidiary of MBK Partners, which was set up in 2005. MBK Partners is now one of the largest private equity funds in North Asia.
MBK Partners is focused on investing in booming Asian markets, particularly in the fields of consumer and retail, telecommunications and media, healthcare, financial services, manufacturing, infrastructure and logistics, and education etc.
MBK Partners is known for its successful deals in the car rental industry in the Asian region. It is an investor in China’s second largest car rental company eHi Car Services and South Korea’s largest car rental company KT Rental. As part of the deal with KT Rental, MBK Partners has introduced a diversified business model to help KT Rental further improve the quality and diversity of products and services, thereby boosting its corporate value.
MBK Partners said that the deal with CAR Inc will enable it to benefit from the long-term growth trend in China. As one of the largest private equity funds in North Asia, MBK Partners has successfully invested in 44 portfolio companies, whose total operating revenue exceeded US$44.1 billion. These strong business performances and positive market responses have further proved MBK’s investment visions and expertise in the sector.
Working together to foster industry integration and explore new growth models
Industry insiders speculate that this privatization deal represents a big move by the two industry leaders to jointly foster integration of the entire car rental industry in China.
Public data shows that China’s car rental industry has been consolidated and strengthened over recent years, leading to huge potential for healthy growth in the years to come. In the long run, as China’s middle class continues to grow and thrive, the demand for business or leisure travel will soar, and the needs for car rentals will remain strong over a long term.
Under such a scenario, the domestic car rental industry is in urgent need of a truly powerful conglomerate, which can help establish unified industry standards, draft the grand blueprint, and further move the industry onto the right track.
The privatization deal between CAR Inc and MBK Partners will help foster a more dynamic and healthier car rental and mobility industry in China. With close collaboration, the two sides will continuously create and meet consumers’ needs for travelling by car, thus contributing to domestic economic activities in a sustained way.
Market analysts believe that MBK’s increased investment in China’s leading car rental platform demonstrated that it is extremely upbeat about the ongoing recovery of China’s car rental industry. As the demand-side reform proceeds, the Chinese mainland market will see a shift towards a consumption-driven growth model. The automotive market is expected to expand further, and the car rental industry will also play a role in spurring domestic consumption.
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