Tuhu, the China-based owner of an online marketplace for car maintenance services, has filed for an initial public offering on the Hong Kong Stock Exchange that could enable internet groups Baidu and Tencent to exit.
Founded in 2011, Tuhu has built an e-commerce platform that helps nearly 73 million registered users find automotive aftermarket services including car maintenance and replacements for car parts and tyres. It runs almost 3,400 outlets and about 33,000 franchise stores across its home country.
The proceeds of the IPO will be used to improve the company’s equipment and help it secure additional logistics and franchise partners, conduct further research and development as well as boosting its data analytics capabilities and increasing headcount.
The company booked a net loss of approximately $694m during the first nine months of 2021 against about $1.3bn in revenue over the same period.
Tencent led a $400m funding round for Tuhu in 2019, the year after it contributed to a $450m series E round that included CICC Qiyuan, CICC Alpha, Carlyle Group, Sequoia Capital, CCB International, Qiming Venture Capital, Joy Capital, Grand Flight Investment, Goldman Sachs and Welkin Capital.
Baidu and Goldman Sachs had provided an undisclosed amount of series D funding for the company in 2016. It had closed a $150m series C round in October the previous year when it completed a Hillhouse Capital-led $50m second tranche featuring Qiming Venture Partners.
The $100m first close two months earlier was backed by Legend Capital, the venture capital fund founded by conglomerate Legend Holdings, in addition to financial services firm Far East Horizon, Qiming and Welkin Capital. It came after a total of $30m from Legend Capital and Qiming across series A and B rounds in 2013 and 2014.
The automotive aftersales industry in China is expected to reach nearly $261bn by 2025, according to China Insights Consultancy (CIC), and Tuhu claims it is the largest platform providing such services in the country, citing the CIC Report.
Goldman Sachs, BofA Securities, UBS and China International Capital Corp are joint sponsors for the offering but the amount it will raise remains undisclosed.
Tencent is Tuhu’s largest shareholder, with a 19.4% stake, followed by company founder, chairman and chief executive Chen Min, who owns 11.8% through his Nholresi Investment vehicle. Baidu holds 1.2% of its shares.