Ride-hailing platform CaoCao Chuxing Raises Over HK$1.85 Billion for Hong Kong IPO

CaoCao's Hong Kong IPO

The final offer price per share was set at HK$41.94, with 100 shares per lot, resulting in an entry fee of HK$4,236.3. On its debut, the stock opened at HK$33.8, which is more than 19% below the IPO price. The joint sponsors for this listing include Huatai Financial Holdings (Hong Kong) Limited, ABCI Capital Limited, and GF Capital (Hong Kong) Limited.

This IPO attracted investment arms of Mercedes-Benz, Mirae Asset Securities (HK) Limited, and Infini Capital, among six cornerstone investors. Together, they subscribed to a total of 22.6424 million shares, accounting for more than half of the funds raised.

Business Landscape and Financial Report of CaoCao

As of December 31, 2024, CaoCao operates in 136 cities and has shown significant financial growth and business transformation over the three years leading up to the listing (2022-2024). Total revenue climbed from RMB 7.63 billion in 2022 to RMB 14.66 billion in 2024, with a compound annual growth rate of 38.5%, primarily driven by the continued expansion of ride-hailing service revenue (accounting for over 90% of total revenue).

Despite net losses over these three years, the loss margin significantly narrowed: from 26.3% in 2022 to 8.5% in 2024. A key turning point was the gross margin turning positive, improving from -4.4% to 8.1%. This improvement was due to the scaled deployment of a customized fleet reducing operational costs and a decrease in driver subsidy dependency — the adjusted ratio of driver income and subsidies to ride service revenue reduced from 84.2% to 79.0%.

Equity Structure and Ownership in CaoCao

In terms of equity structure, founder Li Shufu indirectly holds 77.1% of the shares through Ugo Investment Limited and controls an additional 4.3% of the voting rights of Oceanpine Marvel through a voting rights delegation agreement, totaling 81.0% control of voting rights. Due to China’s foreign investment restrictions, the group employs a contractual arrangement (VIE structure), controlled by a Cayman company through a foreign-owned enterprise agreement with Suzhou Youxing, ensuring economic interests are consolidated within the domestic operating entities Hangzhou Youxing and its subsidiaries.

CaoCao Aims at the Growing Shared Mobility Economy in China

The target market focuses on the untapped potential of China’s shared mobility market, which had a size of RMB 344.4 billion in 2024 and is expected to grow to RMB 804.2 billion by 2029. CaoCao’s core strategies include: expanding geographic coverage through a light-asset model, entering 85 new cities in 2024 and selling customized vehicles to local transport partners rather than buying vehicles; deepening cooperation with aggregator platforms, with 85.4% of orders in 2024 coming from such platforms; and investing in autonomous driving technology, with a Robotaxi pilot launched in February 2025 and plans to introduce L4 autonomous vehicles in 2026.

Strategic Allocation of IPO Funds by CaoCao

Approximately HK$1.8 billion raised from the IPO is allocated across several key areas: about 19% will be used to optimize vehicle service solutions to reduce driver ownership costs; 18% for upgrading customized vehicles to enhance penetration in driver fleets; 17% to improve technology and autonomous driving capabilities; 16% supports geographic expansion under the light-asset model; 20% is allocated to repay substantial bank loans (with liabilities reaching RMB 7.2 billion at the end of 2024); and the remaining 10% for supplementary operational funds.

Competitive Advantages and Market Challenges for CaoCao

CaoCao exhibits significant competitive advantages. Its close collaboration with Geely not only provides strong technical support and resource security but also achieves cost-effective control and service quality improvements through jointly developed customized vehicles. The scaled operation of the customized vehicle fleet not only enhances the brand image but also improves operational efficiency by reducing total cost of ownership (TCO). Additionally, CaoCao stands out in the market with its unique user experience and brand recognition, providing a more comfortable riding experience with intelligent cockpit features and customized vehicles. Coupled with an experienced and visionary management team, CaoCao possesses strong developmental momentum in a fiercely competitive market.

Despite achieving certain milestones in the shared mobility sector, CaoCao faces numerous challenges. The market is extremely competitive and highly concentrated, with the largest players still holding a 70.4% market share in 2024, while CaoCao only holds 5.4%. The company must continually innovate and improve service quality to attract and retain users. Furthermore, although profitability has improved, the company still recorded net losses during 2022-2024, amounting to RMB 2 billion, RMB 2 billion, and RMB 1.2 billion respectively. Moving forward, the company needs to further enhance profitability while continuing to expand its market share to achieve sustainable development. Additionally, the financial demands and debt pressures associated with business expansion are challenges that the company must address. As of December 31 in 2022, 2023, and 2024, the total amount of loans were RMB 5.6 billion, RMB 7.5 billion, and RMB 7.2 billion, respectively. It also needs to manage risks associated with regulatory changes, technology and security risks, and uncertainties brought about by macroeconomic conditions. Technical malfunctions, cyber-attacks, or data breaches could potentially impact service quality, leading to customer attrition and damaging the company’s reputation. Industry trends and macroeconomic impacts might also suppress market demand, adversely affecting the business.

CaoCao’s response strategies include providing a unified service experience with 34,000 customized vehicles (the largest fleet in China); collaborating with Geely to establish a network of battery exchange stations to reduce energy costs; and utilizing the AI system “CaoCao Brain” to dynamically optimize supply and demand matching.