Chinese Car Rental Company eHi Becomes a Hedge-Fund Favorite

  • Ownership totals 29% with Tiger Global taking almost half that
  • Stake is 2nd biggest among U.S.-listed mainland corporations

Hedge funds are making big bets on Chinese car rental company eHi Car Services Ltd.

They increased their collective stake in eHi, which also provides chauffeuring services, to a record 29 percent in the fourth quarter, five times what such investors held the prior three months, data compiled by Bloomberg show. Hedge funds now own a bigger piece of eHi than of any other U.S. listed Chinese company except their 35 percent stake in Autohome Inc.

The hedge funds, including Chase Coleman’s Tiger Global Management, are piling into a company that stands to benefit from China’s growing middle class as the country transitions to a consumer-driven economy. Ehi completed a $200 million debt financing in December, which will help it achieve an optimal fleet size by 2017, according to JPMorgan Chase & Co. report.

American depositary receipts of Ehi jumped 8.6 percent in the fourth quarter and have since fallen 4.9 percent to $11.97. The company offers “Zipcar-like” service in China and has a partnership with the country’s biggest online travel service provider Ctrip.com International Ltd.

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