Cango, a China-based automotive sales service provider backed by corporates Tencent, Taikang Life Insurance and Didi Chuxing, has floated in the US in a $44m initial public offering.
The offering consisted of 4 million American depositary shares (ADSs) priced at $11.00 each issued on the New York Stock Exchange. The company had initially targeted $300m for the IPO before setting a $10 to $12 range for 12.5 million ADSs two weeks ago.
Cango operates an online platform that connects car dealers, buyers and financial institutions, helping to leverage financing for vehicle sales and provide after-sales services. It generated $55.6m in net income in 2017 from almost $168m in revenue.
About $20m of the IPO proceeds will be used to fund research and development activities, as Cango seeks to strengthen its data and technology capabilities.
The company’s recent funding includes a January 2018 round featuring internet group Tencent, an investment by life insurer Takiang the month before and funding from private equity firm Warburg Pincus in May 2017, according to the IPO filing.
On-demand ride service Didi Chuxing also made a series of investments in Cango in the first half of this year, and the two formed a business cooperation agreement earlier this month that is expected to provide the basis for a strategic partnership.
Didi Chuxing’s stake was cut from 14.8% to 14.4% post-offering while Tencent now owns 10.5% of the company and Taikang 5.2%. Medway Brilliant, a vehicle for Cango CEO Jiayuan Lin, holds 20.2%, Warburg Pincus 17.7% and Eagle Central, which represents chairman Xiaojun Zhang, 13.1%.
oint bookrunners Morgan Stanley, Merrill Lynch, Pierce, Fenner & Smith and Goldman Sachs (Asia) have the 30-day option to acquire another 600,000 ADSs at the IPO price, which would lift the size of the offering to $50.6m.