UCar Secures 2.4 Billion Yuan From PICC’s Unit to Expand Car-Dealership Business

(Beijing) — UCar Group, one of the smaller homegrown ride-hailing companies in China, has raised another 2.4 billion yuan ($353 million) in a private share placement as it ventures into the less-crowded vehicle-dealership business.

UCar, which hasn’t been profitable since it began operating in 2015, said on Monday it has sold 140 million shares at 16.8 yuan each to an asset-management unit of People’s Insurance Company of China. The deal valued UCar at around $6.8 billion, a fraction of the estimated $50 billion worth of Didi Chuxing, the country’s biggest ride-sharing company with an 80% market share.

Earlier in February, UCar raised 4.6 billion yuan from selling shares to several investors, including China UnionPay and Shanghai Pudong Development Bank. UCar founder and CEO Lu Zhengyao said in March the new funds will be used to boost its dealership unit Shenzhou Maimaiche, including building more brick-and-mortar dealers, purchasing cars and boosting marketing efforts.

Unlike Didi, which relies heavily on outsourced drivers and their own cars, UCar operates with an in-house fleet and licensed drivers to serve the high-end market. But in a car-sharing market long dominated by Didi, UCar has been branching into car dealership and vehicle financing since late last year. Lu had said the online car-hailing market is saturated, and that UCar is looking to shift to other segments such as car sales.

Shenzhou Maimaiche has opened physical stores in 122 cities across China. The fresh funds will be spent on growing its physical presence to 300 to 500 stores in three years. UCar said since the entire expansion will likely require up to 12 billion yuan, it may turn to bank loans for additional funding.

UCar said in 2016, it fetched revenues of nearly 6 billion yuan, but reported a net loss of 3.67 billion yuan. Lu said in May the company is on track to be profitable in 2017.

Contact reporter Liu Xiao (liuxiao@caixin.com)