What’s new: Shanghai-based car maintenance startup and auto parts distributor Tuhu Car Inc. has filed for an IPO in Hong Kong.
The Goldman Sachs and Tencent-backed firm is seeking new funding to expand its business as increased demand fails to arrest the growth of its losses.
Tuhu plans to use money raised from the IPO to help automate its distribution centers through the use of robots, build more warehouses, and develop technologies for data wrangling, the firm said in a preliminary prospectus published Monday.
The firm, which operates in the Chinese mainland through wholly-owned subsidiary Shanghai Lantu Information Technology Holding Ltd., did not give a timetable for the share sale or specify how much it aims to raise.
The background: Founded in 2011 with its first logistics center established in Shanghai in 2012, Tuhu mainly provides car repair and maintenance services and parts using an online-to-offline business model that its founder has likened to U.S. coffee chain Starbucks.
Tuhu claims to have had 72.8 million registered users as of Sept. 30, 2021.
In the first nine months of 2021, its adjusted net loss swelled by 53% year-on-year to 902 million yuan ($142 million), even as revenue grew 42% year-on-year to 8.4 billion yuan, according to the prospectus.
According to research commissioned for the prospectus, China’s automotive after-sales market was worth 1 trillion yuan in 2020, and was expected to reach 1.7 trillion by 2025, on the back of growing car sales, average miles traveled and age per car.
Last year China’s State Administration for Market Regulation fined Tencent 500,000 yuan for failing to seek regulatory approval for its 2018 acquisition of around 13% of Tuhu.
Contact reporter Ding Yi (yiding@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)
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