Business
Senmiao Technology Signs an Investment Agreement with Hongyi Industrial Group to Invest RMB50 Million in Senmiao's Auto Business
Investment of approximately US$7 million is expected to accelerate expansion of Senmiao's automobile transaction and related services business in Sichuan
About this update from Senmiao Technology Limited
[{"type":"text","content":"Investment of approximately US$7 million is expected to accelerate expansion of Senmiao's automobile transaction and related services business in Sichuan Province\n\n\nCHENGDU, China, July 8, 2020 /PRNewswire/ -- Senmiao Technology Limited (\"Senmiao\") (NASDAQ: AIHS), a provider of automobile transaction and related services targeting the online ride-hailing industry in China, today announced that its Chinese variable interest entity has secured a RMB50 million (approximately US$7 million) investment from Hongyi Industrial Group Co., Ltd. (\"Hongyi\"), an affiliate of the largest shareholder of Chengdu Road & Bridge Engineering Co., Ltd., a construction engineering company publicly listed on the A-Share market in China.\nThis investment was not made in Senmiao directly, but rather into Jinkailong Automobile Leasing Co., Ltd. (\"Jinkailong\"), which Senmiao controls through its majority owned subsidiary, Hunan Ruixi Financial Leasing Co., Ltd. (\"Hunan Ruixi\"). Jinkailong is the entity through which Senmiao operates its automobile transaction and related services business (\"Auto Business\"), primarily in the city of Chengdu. Senmiao intends to use the capital investment for the expansion of Jinkailong's Auto Business in Chengdu, specifically to purchase more automobiles for its vehicle rental business to short lease ride-hailing drivers and open additional retail stores to provide auto financing and transaction facilitation services to ride-hailing drivers. \nPursuant to the agreement governing this investment (the \"JKL Investment Agreement\"), Hongyi has agreed to make a capital contribution to Jinkailong of RMB50 million (approximately US$7.0 million) over the coming months in consideration of a 27.03% equity interest in Jinkailong. As a result of the investment by Hongyi, the ownership of the current shareholders of Jinkailong (including Hunan Ruixi and certain other unaffiliated parties) will be proportionally diluted, although Senmiao will continue to control Jinkailong via existing voting agreements with certain shareholders of Jinkailong.\nMr. Xi Wen, Chief Executive Officer of Senmiao, commented, \"We are delighted to sign this landmark deal with Hongyi as we believe it will increase our ability to further expand our market share in the rapidly developing online ride-hailing industry in China. Hongyi, a corporate ente...