“The IPO will facilitate a partial exit for CarTrade investors like Warburg Pincus, Temasek, JP Morgan, March Capital and other parties who are the selling shareholders,” said a source. [Representative Image]
CarTrade Tech Ltd, which had hit near unicorn status post its last fundraising round in April, is one step closer to becoming India’s first online auto classifieds marketplace to list on the domestic bourses.
The firm - backed by marquee investors such as Temasek, Warburg Pincus and JP Morgan - has filed its draft red herring prospectus (DRHP) with SEBI to raise around Rs 2,000 crores via an initial public offer (IPO), sources with knowledge of the matter told Moneycontrol.
The move comes on the back of consumer’s preferring personal mobility and a sharp surge in used/second hand car sales during Covid -19 which has provided a fillip to the firm’s business.
Moneycontrol was the first to report CarTrade’s listing plans and DRHP filing timeline on February 9.
“The papers have been filed with the market regulator. There is no fresh issue of shares and the IPO consists of a pure OFS or offer for sale of 12,354,811 equity shares,” said one of the individuals cited above.
“The IPO will facilitate a partial exit for CarTrade investors like Warburg Pincus, Temasek, JP Morgan, March Capital and other parties who are the selling shareholders,” said a second individual.
“Axis Capital, Kotak Mahindra Capital, Nomura and Citi are the investment banks works on the CarTrade IPO," a third individual told Moneycontrol.
“Cyril Amarchand Mangaldas is the company counsel, Indus Law is the counsel to the i-banks and AZB & Partners is the counsel to some of the selling shareholders,” he added.
A fourth individual also confirmed the filing of the DRHP by CarTrade and shared that it is the only profitable player in the highly fragmented and complex segment.
All the four individuals spoke to Moneycontrol on the condition of anonymity.
Moneycontrol could not connect with CarTrade, the investment banks and law firms for an immediate comment.
In mid-April, CarTrade sealed a $25 million fundraising round led by IIFL & Malabar Investment Advisors, after which it was valued close to a $1 billion (unicorn status).
The firm competes with the likes of Droom, Cars24, Quikr, Olx and Mahindra First Choice Wheels. It’s founder and CEO Vinay Sanghi was the CEO of Mahindra First Choice Wheels between 2000 and 2009.
In November 2015, CarTrade acquired rival CarWale from German media conglomerate Axel Springer for around Rs 590 crore. Later in January 2018, it picked up a 51 percent stake in vehicle auctioning platform Shriram Automall India Private Ltd, a subsidiary of commercial vehicle lender Shriram Transport Finance.
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Founded in 2009, CarTrade.com is an online auto marketplace providing buyers and sellers a structured platform for transacting in new and used vehicles. Since its inception, it has expanded its offerings across India with a network of more than 4,000 dealers. Currently, over 4 million unique consumers visit CarTrade.com every month according to its website.
The firm’s business can be divided into two parts: CarTrade.com, the consumer portal where the users can visit to buy and sell used/new cars and CarTradeExchange, the dealer portal which helps them manage their business operations.
Some of the portal’s features include used car price information, certified used cars, on road dealer prices and expert reviews that help buyers and sellers to choose suitable vehicles at affordable prices. Additionally, the portal also provides information related to the automobile industry and the latest automotive news, including reviews of upcoming models in the market.
According to reports in March 2020, the firm had a gross merchandise value of around $3 billion and was planning to apply to the RBI for an NBFC license. A June 3, 2020 report by Inc42 said that Cartrade earned Rs 137.14 crore in FY20, with a total expense of Rs 128.25 crore resulting in a net profit of Rs 8.88 crore.
The domestic used car market was worth $24.24 billion in 2019 and is likely to grow at a CAGR ( compounded annual growth rate) of 15.12 per cent during 2020-2025, according to data from market research firm Mordor Intelligence.