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Dongzheng starts bookbuilding
Posted on Wednesday, 13 March 2019 10:53
Shanghai Dongzheng Automotive Finance has started bookbuilding on an initial public offering (IPO) in Hong Kong that could fetch as much as HKD 3.36 billion (USD 428.00 million).
According to a term sheet seen by the media, China ZhengTong Auto Services’ car loan arm is marketing 533.30 million shares, representing a quarter of the enlarged capital, at HKD 4.20 to HKD 6.30 apiece.
ZhengTong has a pre-IPO stake of 95.0 per cent in the licensed automotive finance company (AFC), formed in March 2015 in conjunction with state-owned Dongfeng Motor (5.0 per cent).
The controlling shareholder initiated the spin-off to focus on its own core activities, comprising sales and spare parts, among other things,
Dongzheng disbursed 31,577 retail loans for the purchase of luxury-brand cars with an aggregate principle amount of CNY 6.11 billion (USD 910.06 million at current exchange rates), as at 31st December 2018.
The group also offers credit to dealers to facilitate buying new vehicles that would then be sold on to end-customers.
Currently, commercial banks, AFCs, and financial leasing and internet finance companies are the four major participants in China’s retail auto finance market.
However, in recent years the segment in which Dongzheng operates has pulled ahead of the field and in 2017 accounted for 57.0 per cent of the overall sector in terms of loan principal amount.
The group’s sales network includes external dealers and ZhengTong’s dealers and totalled 226, 351 and 1,280, as of 31st December 2016, 2017 and 2018, respectively.
At the end of 2018, it had a presence across 182 locations in China, comprising all of the four first-tier cities, namely Beijing, Shanghai, Shenzhen and Guangzhou, as well as 36 second-tier ones and 142 third- and other lower-tier ones.
Dongzheng had liquidity ratio of 1,180.0 per cent, capital adequacy ratio of 31.2 per cent, tier one capital adequacy ratio of 30.1 per cent and overall non-performing loan ratio of 0.2 per cent, as of 31st December 2018.
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