Used Car Operator Uxin to Floor It With $500 Million IPO Plan

Used car services platform operator Uxin Ltd. is aiming to raise up to $500 million in a New York IPO, in one of the first major deals by a young group of online firms capitalizing on China’s fast-growing preowned-vehicle market.

The listing plan is also the latest from a growing group of online-based Chinese firms capitalizing on strong investor sentiment toward emerging new sectors like used cars, financial services and education, which take advantage of scalability on the web to fuel their rapid growth.

Uxin is one such company, submitting data that showed the transaction volume and value of merchandise traded over its platforms both grew about 68% last year, according to a company prospectus filed on Wednesday.

The company, which counts internet search leader Baidu Inc. as one of its major shareholders, saw its revenue more than double last year to 1.95 billion yuan ($304 million), though the rate slowed slightly but still nearly doubled to 649 million yuan in the first three months of this year. The company reported a loss of 1.53 billion yuan in the first three months of the year, nearly triple its loss from a year earlier.

“Both consumers and businesses in China face significant challenges in buying and selling used cars, such as access to a limited number of vehicles, incomplete and unreliable information about vehicles, and complex transaction processes,” the company said, calling itself China’s leader in its area. “Our platform addresses these issues by enabling consumers and businesses to discover, evaluate and transact in used cars throughout China, providing a reliable and one-stop transaction experience.”

China is the world’s largest car market, with nearly 29 million units sold last year to the nation’s rapidly rising middle class. The used car market is smaller but developing quickly behind, with 12.4 million cars changing hands last year, according to Uxin’s report, citing iResearch. The market is forecast to grow by a brisk 19% annually between 2017 and 2022, nearly double the rate of previous years, as the number of vehicles in the market increases and people become more comfortable with used car ownership.

Uxin is one of several used car specialists fighting for a share of that market, many backed by big internet names. Other players include Souche, backed by e-commerce giant Alibaba Group Holding Ltd., and Renrenche, backed by social networking giant Tencent Holdings Ltd.

Underwriters of the Uxin offering include Goldman Sachs, Morgan Stanley and JPMorgan, as well as Chinese investment bank CICC.

Contact reporter Yang Ge (geyang@caixin.com)