CHINA’S largest car rental company CAR Inc. is set to raise US$467 million in a Hong Kong IPO, pricing at the top of expectations as retail investors flocked to the deal, sources with direct knowledge of the offering said.

    The IPO is the biggest in Hong Kong since pork producer WH Group Ltd. raised US$2.4 billion in late July. It comes as the Hang Seng index rose to its highest level in more than six years last week, boosted by upbeat China economic data and planned stock trading links with Shanghai.

    Bullish long-term prospects for China’s car rental market have helped draw in investors. It is forecast to surge to 65 billion yuan (US$10.6 billion) by 2018, nearly double 2013 levels, according to estimates from industry consultancy Roland Berger quoted in the prospectus.

    Formerly known as China Auto Rental Inc., the company is backed by private equity firm Warburg Pincus and Hertz Global Holdings Inc.

    It is set to price its 426 million new share offering at HK$8.50 (US$1.1) per share, the sources said. That compares with an indicative range of HK$7.50 to HK$8.50. The shares will debut on the Hong Kong stock exchange Friday.

    While CAR’s IPO has gone smoothly, Stephen Yang, an analyst at Sun Hung Kai Financial said that key negatives, such as the company’s need to replace its rental fleet every three years, made him cautious on the stock.

    “Cash flows and investment returns depend on CAR’s ability to resell vehicles at reasonable values after three years of operations. We assume some of these cars are sold to franchisees, but the resale market is immature and lacks national distribution,” he wrote in a note to clients.(SD-Agencies)