June 24，EHI Car Rental (NYSE:EHIC) announced that it will sell 100% of its equity in Elite Plus Developments Limited to an independent third party Eagle Legend Global Limited to acquire 1.$6.1 billion gross revenue。April 2014，EHi Car Rental invests US$25 million in Kuaidi Taxi operator through Elite Plus。The profit between buying and selling is nearly 1.US$3.6 billion，The fourteen-month investment return rate reached 443.6%。

So，Some people applaud eHi Car Rental’s “high return business”；There are also so-called "industry insiders" who told the media: "EHi Car Rental has just received investment from Tiger Fund，Selling Didi Kuais shares at this moment is definitely not a lack of working capital。”

Elite PLuse for sale、What does it mean to raise funds from Tiger Fund？What is the future of eHi Car Rental’s business model？

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Exited from “High Return Business”

EHI Car Rental is disclosed in the prospectus，On April 21, 2014, through its wholly-owned company Elite Plus to Travice Inc.(Kuaidi taxi operator) invested US$25 million to subscribe for Class B ordinary shares，Get 8.4% equity。Also，EHI Car Rental also received 468 subscriptions.Authorization of 40,000 Class C ordinary shares。

Based on public information，“Kuaidi Taxi” completed its first round of financing in 2012；April 2013，Alibaba and Jingwei invested US$10 million；Alibaba led an investment of about US$100 million in 2014，EHi Car Rental became a shareholder in this round。Based on the amount invested and share ratio of eHi Car Rental at that time，It can be 188bet online sports betting inferred that "Kuaidi Taxi" is valued at US$300 million。

January 15, 2015，Kuaiti Taxi Announces Purchase from SoftBank、Ali、Tiger Global Fund received a total investment of US$600 million。EHi Car Rental did not participate in Kuaidi Taxi’s follow-up financing，The dilution situation is not detailed。Assuming this round of financing, Kuaidi Taxi’s valuation is US$3 billion，The share ratio of eHi Car Rental will be diluted to approximately 6.7%。

February 14，Kuaidi announces strategic merger with Didi。Travice Inc owned by eHi Car Rental.The equity was exchanged for the equity of "Xiaoju Kuai Zhi"，The latter is the Cayman Holdings Company after the merger of "Didi Kuaidi"。

Quick、Didi’s market share is almost the same，Consider Tencent again、Ali’s face，The shareholding ratios of both shareholders in the new company will be quite close (rumored ratio is 52%、48%，Didi has a slight advantage)。Sure enough，Ehi Car Rental, which holds 6% of Kuaidi, holds about 3% of Didi Kuaidi’s shares after the merger.2%。

June 25，EHi Car Rental announced that it won 1.USD 6.1 billion in cash，Exit from “Didi Kuaidi”，The corresponding valuation is US$5 billion。

But Didi Kuaidi’s market is bullish，Almost a thousand miles a day。It is rumored to be in Ali、Tencent、Hillhouse Capital’s latest $2 billion investment round valued at $15 billion，3 times the valuation at the time of exit of eHi Rental！

Alibaba did not lack a mere US$25 million that year、EHi Car Rental was not introduced as a financial investor；EHi Car Rental, which was preparing to go public at the time, had no spare money to “speculate in stocks”，The press release also talks about “strategic investment in fast taxi services”。In this case，Profits and losses should be measured by whether strategic goals are achieved。If the answer is no，No matter how high the financial return is, it is still a failed investment。Didi Kuaidi’s “Two out of three in the world”，Uber is coming，China、Yidao is eyeing，At this time, eHi 188bet app download Car Rental divests from Didi Kuaidi，Strategically illogical。

Financially speaking，Cash out at a valuation of US$5 billion，The target valuation rose to US$15 billion in an instant，Not too clever。Look at others’ Sina Weibo，Invest 1 in Xiaoju Kuai Zhi on May 26th.US$4.2 billion，It’s almost like getting on the boat。

Anyway，Ehi Rental’s exit from the “high-return business” of “Didi Kuaidi” was mostly due to helplessness，It’s not that people don’t play with them，It’s just that my family is really short of money。

Equity financing is expensive and was reduced by strategic investors

May 22，EHI Car Rental announced that it will sell 22.34 million new shares at a unit price of US$6 (1116.90,000 copies of ADS)，The subscribers are Tiger Global Management Company (referred to as Tiger Management) and SRS Investment Management (referred to as SRS)。

The issuance of new shares is carried out in two steps:

1) eHi Car Rental will issue 11.44 million ordinary shares to Tiger Management and SRS；

2)After obtaining the approval of the shareholders’ meeting，Issuance of the remaining 10.9 million shares；

The reason for this arrangement is，The additional issuance of 22.34 million shares exceeds the authorization of the shareholders' meeting (generally 10% of the issued share capital)，Requires "special approval"。EHI Car Rental Disclosure，At the extraordinary general meeting of shareholders held on June 30，The plan to issue 10.9 million shares was approved。

Follow the classic “pick up order”，Debt financing has a higher priority than equity financing。Because “equity financing is the most expensive”。Of course there is no need to be dogmatic when the stock price is high。If approved by the China Securities Regulatory Commission，Baofeng Technology, whose stock price has soared nearly 30 times, must be willing to issue additional financing。EHi Car Rental issued new shares at the IPO price seven months after listing，Obviously not because the stock price is high，Investors participating in the IPO of eHi Car 188bet online sports betting Rental will not be happy (the stock price did not rise、Equity has been significantly diluted)。

Through the above arrangement，EHi Car Rental raised a total of 1.US$3.4 billion，8,300 cars can be purchased (assuming the average price is 100,000 yuan)。But the new shares issued are equivalent to 19% of the issued share capital.5%，The price is quite high。 End of the first quarter of 2015，The Shenzhou fleet leads Yihi 4.90,000 vehicles (7 for both companies.30,000 vehicles、2.40,000 vehicles)。If you rely solely on equity financing，The valuation is so low，It is difficult for eHi Car Rental to narrow the gap with the industry leaders。

Received over 1 from Tiger Fund and SRS in "Ehi Car Rental".The US$300 million strategic investment” is widely publicizedAt the same time,Same announcementThe information about the reduction of holdings by Ctrip and Crawford Group was ignored intentionally or unintentionally。

According to announcement，Ctrip and Crawford will reduce their holdings by 166 respectively.70,000 shares and 1 million shares，The unit price is also US$6。These stocks are from October 2014，Class A ordinary shares purchased before Yihi Car Rental went public。After reducing their holdings, Ctrip and Crawford still rank first in eHi Car Rental、The second largest shareholder，Tiger Fund, which holds 16.67 million shares, is the third largest shareholder。

Although the two major shareholders cashed out only US$16 million，But other people’s “parents” generously spent a billion dollars，Ctrip is reducing its holdings (still based on the issue price at the IPO)。In this case，Both the person who reduced his holdings and the one who was reduced felt very unhappy。

Financial investors inject funds with one hand to maintain the company's operations，Collect chips with the other hand，Seems to have a clear plan for the next capital operation，I don’t know if it will be sold or privatized back to A shares？

I buy a car while others spend money, who is smarter than the other?

At the end of June 2014, the size of the eHi fleet 188bet sports betting app download was 1.540,000 vehicles，19,746 vehicles by the end of 2014，Net increase of 4,300 vehicles。After listing，EHI Car Rental has significantly increased its efforts in purchasing vehicles。According to media reports，EHI Car Rental and SAIC、Dongfeng、BMW、Volvo signed a series of purchase contracts。Among them，SAIC MG Ruiteng purchases thousands of vehicles。

End of the first quarter of 2015，Fleet size expanded to 2.440,000 vehicles，A net increase of more than 4,600 vehicles compared with the end of 2014，Growth rate more than doubled。At the same time,Retired 999 old cars。During this period，EHi Car Rental’s “net value of properties and equipment” increased by 6.500 million，Indicates that more than US$100 million raised by the IPO has been almost spent。

EHi renting a car is not “absolutely not short of money”，But "absolutely short of money"！So，Tiger’s 1.US$300 million is a high price but it has to be obtained；It’s helpless to be eliminated from Didi Kuaidi，Get 1.US$600 million is enough to solve the urgent need。

According to China Car Rental Disclosure，Vehicle purchase expense in Q1 2015 is 23.05.8 billion。

Didi、Before Kuaidi’s merger, the “subsidy war” was fought vigorously，China、Yihi but quietly competes to buy a car。

However，Is the car you bought smart?？Take eHi Car Rental as an example: Q1, 2015，Fleet size increased by 81% year-on-year.7%，Revenue increased by 60% year-on-year.7%，Unit daily income (RevPAC) dropped from 173 yuan to 156 yuan。100,000 yuan to buy a car，One day income 156 yuan。This is not yet net income，More than 80% of them are used for the operation of leasing business。There are also administrative expenses、Advertising, marketing costs and interest must be paid out of the remaining 30 yuan。# thankless effort#

The car rental industry is a capital-intensive and overweight asset industry，Requires massive funding，Only when the scale reaches above the break-even point is it possible to usher in "good days"。International car rental giant Hertz 188bet app operates 550,000 vehicles worldwide，2014 revenue $107，But he didn’t live a good life either，Profit is thinner than paper。

Uber’s latest soft financing valuation has reached $50 billion。Hertz’s market cap is only $7.7 billion，Don’t say that the limelight was completely stolen by Uber，Even Didi Kuaidi’s valuation is twice as high as it！

Follow the traditional car rental route，The most you can win is the title of "China Hertz"，Limited imagination。No wonder they are not treated well by capital。

China Car Rental、EHI Rent a Car should also think carefully，Don’t be too busy laughing at Didi for burning money。