Leading auto e-commerce player CarTrade.com, which is backed by marquee investors such as Temasek, Warburg Pincus and JP Morgan, has initiated preliminary discussions with advisors to launch an initial public offer in 2021 to raise around Rs 2,000 crore, people with knowledge of the matter told Moneycontrol.
If the listing plans are successful, this would be the first-ever IPO on the domestic bourses by an online auto classifieds marketplace or platform.
CarTrade.com, which is also backed by March Capital & Epiphany Ventures, competes with the likes of Droom, Cars24, Quikr, Olx and Mahindra First Choice Wheels. The firm’s founder and CEO Vinay Sanghi was the CEO of Mahindra First Choice Wheels between 2000 and 2009.
"Investment bank Axis Capital has been engaged as the left lead for the proposed IPO by CarTrade.com and legal advisors are also on board. More investment banks may be appointed at a later stage. As of now, the plan is to raise around Rs 2,000 crore, but the final size may vary later,” said one of the persons cited above.
“The IPO is likely to be a mixture of primary and secondary issue of shares and will mainly facilitate a partial exit for the company’s investors along with raising growth capital. The company will take a final call on IPO proceeds post discussions with Sebi. The target is to file the DRHP (draft red herring prospectus) in May,” a second person told Moneycontrol.
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.
“Many of the e-commerce players want to hit the markets in the next 12 to 18 months. In the case of CarTrade.com, some of their businesses are profitable and during Covid-19, the firm has bounced back as the sale of second-hand cars has picked up sharply. They are doing quite well on numbers,” added a third person familiar with the firm’s IPO plans.
“Anything associated with new/used car sales will do well since the sector is at the bottom of the cycle,” said a fourth individual elaborating on CarTrade’s IPO preparations and the market environment.
All the four persons spoke to Moneycontrol on the condition of anonymity.
In response to an email query from Moneycontrol, Temasek and JP Morgan declined to comment. Moneycontrol has sent reminders and is awaiting email responses from CarTrade.com, Axis Capital, Warburg Pincus and March Capital.
CARTRADE LOOKING TO DRIVE INTO D-STREET
According to a report dated June 3, 2020 by Entrackr , CarTrade had a valuation of around $525 million post a Rs 321.6 crore fundraising round which saw participation by investors Warburg Pincus, Temasek and March Capital Partners. Post the fund raise, Warburg Pincus held a 34.74 per cent stake, 26.7 per cent was held by Temasek, March Capital held 9.87 per cent stake and founder Sanghi’s stake was diluted to 5.7 per cent, the report said.
According to reports in March 2020, the firm had a gross merchandise value of around $3bn 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.
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 CarTrade Exchange, 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.
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.