Son of George Soros to invest in ZhengTong Auto

• Source: Global Times
• [08:16 December 03 2010]
• Comments

By Chen Xiaomin

Robert Daniel Soros, son of billionaire investor George Soros, will invest $50 million in the Hong Kong initial public offering of China ZhengTong Auto Services Holdings, the Oriental Daily News said Wednesday, citing unidentified market sources.

JPMorgan Chase & Co, the IPO's sole global coordinator, and Xing Jun, investor relations director of ZhengTong, declined to comment.

BMW's second-largest dealer and the mainland's 21st-largest auto dealer plans to raise between HK$3.4 billion ($437.65 million) and HK$4.3 billion ($553.5 million) from the IPO.

The application period ended Thursday noon. The company plans to price the shares December 3 and start trading December 10.

"The company has grown quite fast in the past several years. And its growth potential is also huge as China's auto market will continue to boom in the next five years," Chen Huanyu, a Shenzhen-based auto analyst with Guotai Junan Securities Co, told the Global Times.

The company operates 22 dealerships in 14 cities and aims to more than triple its outlets to 68 by the end of 2012.

Besides selling luxury vehicles and medium-end cars for automakers such as Nissan Motor Co, Hyundai Motor Co and General Motors Co, ZhengTong's businesses also include sales of used cars and after-sales services and repairs.

ZhengTong said its gross margins on revenue for new car sales were 3.2-4.6 percent in the past four years, compared with 35.4-39.2 percent for after-sales services and repairs over the same period.

As China's car ownership grows, the market for after-sales services and repairs is sure to boom, said Chen.

Chen said if Robert Soros' capital injection was to materialize, it would boost ZhengTong's stock prices by 10 percent.