JD Digit-backed Chinese Used Car Financing Service Meili Files For US IPO

Meili Auto Holdings Limited, a Chinese platform that facilitates financing for used car purchases, has filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC) on Thursday to raise as much as $100 million.

The prospectus did not disclose the pricing terms of the listing. Meili plans to float its shares on the New York stock exchange under the symbol “ML.”

The Chinese auto financing company, founded in 2014 and based in Beijing, is seeking to go public in the United States after it realized profitability last year with a net income of 318.5 million yuan ($46.4 million), compared to a net loss of 358.5 million yuan in 2017, according to the prospectus.

Unlike other auto service platforms in China, such as Sequoia and Tencent-backed Guazi.com and Nasdaq-listed Uxin Ltd, which not only provide auto financing but also other services like auto trading, insurances, and online auctions, Meili specializes in the country’s nascent yet fast-growing used car financing market. The market grew at a compound annual growth rate (CAGR) of 81.3% from 7.7 billion yuan in 2013 to 150.2 billion yuan ($21.32 billion) in 2018, according to a Frost & Sullivan report cited in the prospectus.

Meili said that the used car financing market presents “massive untapped potential for financial solution providers,” driven by China’s rising disposable per capita income, underserved prime borrowers, a dispersed dealer network, as well as the lack of technological and risk management capabilities.

The company helps consumers access auto loans from financial institutions. It facilitated a total of 206,116 used car financing transactions in 2018, ranking among the top three used car financing solution providers in China, per the Frost & Sullivan report.

In the first half of 2019, Meili facilitated 112,682 used car financing transactions with a transaction value of 7.89 billion yuan ($1.12 billion), up 43.1% from the transaction value in the same period in 2018.

The company claims to have raised nearly $200 million in total funding from investors including early-stage investment company Morningside Venture Capital, Chinese venture capital firm Gaorong Capital and fintech-focused private equity firm Lingfeng Capital, shows the company website.

Key View Investments Limited, an affiliate of Chinese conglomerate New Hope Group, is the largest shareholder of Meili with a 16.3 per cent stake. The operator of Chinese personal finance management app Wacai.com holds a 11.5 per cent stake, while a subsidiary of JD Digit, the fintech arm of Chinese e-commerce giant JD.com, has 5.9 per cent shares.

USB Investment Bank, Deutsche Bank Securities, Nomura, CICC, Needham & Company, and Tiger Brokers are the underwriters of the deal.