One may have a second thought before purchasing a used car, but millennials in China are slowly changing this attitude towards owning one. A research firm recently published a report stating that the supply of used cars in China will increase as the market matures and the cost benefits will start to stand out more.
And reaping full benefit is the Nasdaq-listed Chinese company Uxin Limited, an online marketplace for buying and selling used cars. The company on the 29th of May announced entering into an agreement with a few investors to sell convertible notes worth US$230 million. The company went public in June last year and had raised US$225 million during the first day of IPO trading.
With the fresh proceeds, Uxin plans to enhance cross-regional used car transactions — a new area of focus the company has been banking upon. For this, it signed a convertible note purchasing agreement through a private placement with China-based multi-category online classifieds platform 58.com, and US-based investment firms, Warburg Pincus and TPG, along with other unnamed investors.
The private placement, expected to be closed by next month, converts to ride-hailing firm’s Class A ordinary shares at a price of US$1.03 per share or US$3.09 per American depositary shares (ADS). The company is also said to provide each investor with the right to nominate one director to the company’s board upon completion of the deal. Uxin was trading at US$2.49 at the time of publishing this report.
“We continue to receive support from our pre-IPO investors who value our long-term strategy and growth. We are confident that we will further solidify our leadership position in China’s used car ecommerce sector,” Kun Dai, Uxin Founder, says.
Partnerships
Six months after the company went public, it entered into a partnership with Alibaba-owned homegrown ecommerce company Taobao to expand its used car services across the Chinese region. The partnership allows Uxin to sell its used cars through Taobao’s e-commerce platform, with features such as intelligent listing, VR car viewing experience, etc.
“Uxin and 58.com will also explore cooperation in areas such as traffic and inventory acquisition, used car inspections, big data analysis and SaaS,” the company said. 58.com operates multi-content categories and listings including real estate, recruitment, and used cars.
58.com CEO, Michael Yao, says, “58 Used Car will benefit tremendously from Uxin’s offline transaction-related expertise. We believe this investment will create strong synergies for both companies.”
Used Car Market and Uxin’s Offering
China’s used car market is estimated to have surged by 11.5 per cent YoY to 13.8 million units in 2018, according to research firm China Knowledge’s report published this month. The report notes that “previously many young people viewed purchasing a second-hand car as embarrassing, this has now changed (in China).”
The same report says that one-third of Uxin’s buyers were under the age of 29. Sales from those aged below 29 had contributed 18 per cent more to total sales from 2017 to 2018.
Launched in 2011 with headquarters in Beijing, Uxin Limited operates in mainly two categories: Uxin Used Car, which provides consumers with customised car recommendations, insurance referral, warranty; and Uxin Auction, which helps businesses to source vehicles and facilitate cross-regional transactions. The company claims to have an offline network of more than 670 service centers in over 270 cities in China.
Before going public, Ubix had last raised US$500 million Series D funding in January 2017 from Innovision Capital, Jeneration Capital, and TPG. It also counts Tiger Global Management and Huasheng Capital as investors.
[“source=entrepreneur”]
