Droom eyes ₹1,000 crore through IPO
MUMBAI: Droom, a technology startup focussed on selling cars and bikes, has started work on its initial public offering (IPO), joining the many startups that are going public in India, said two people aware of the development.
Droom, an online automobile marketplace, has hired investment bankers for a planned public listing worth about ₹1,000 crore as it seeks to join other startups rushing to tap a record stock market rally, two people aware of the matter said.
The company is likely to file draft papers for the initial public offering in the next couple of months, and the IPO could be launched in early 2022, one of the two people said.
“They have picked up two domestic investment banks, JM Financial and ICICI Securities, to begin work on their IPO,” the person said, requesting anonymity.
“The company plans to raise up to ₹1,000 crore through the IPO, which will be a mix of primary and secondary share sales,” the person said, adding that the IPO could see some of Droom’s existing investors pare their stakes.
Droom did not respond to an email seeking comment.
Droom, which began operations in 2014, raised the first tranche of its pre-IPO round in July this year, valuing the startup at $1.2 billion. New investors, including 57 Stars and Seven Train Ventures, took part in the round, along with some existing investors.
While the pandemic initially impacted sales of online platforms such as Droom, it made a sharp rebound since the end of last year as fears of infection spurred demand for personal mobility.
“Droom has witnessed a jump in used vehicle sales in H1 2021 due to a few factors, which includes people preferring ownership rather than shared mobility, uncertainties in economic condition due to the pandemic, and less depreciable value of used vehicle versus new vehicle. Most of the buying traffic on Droom came from Delhi, Hyderabad, Jaipur, Mumbai, especially for the petrol + manual variants,” the second person said.
“Droom has built the entire ecosystem around used automobiles for the digital economy, including first-mile services such as Orange Book Value (used vehicle pricing engine), ECO (vehicle inspection), History (historical records for used vehicles), Discovery (dozens of prebuying research tools), mid-mile such as Financial Services (loan; insurance) and last-mile such as Droom Velocity for doorstep delivery,” the person said.
In a July interview, Droom founder and chief executive officer Sandeep Aggarwal said that the company’s annual run-rate is $1.7 billion for gross merchandise value (GMV) and $54 million for net revenue.
“The company remains on track to touch a GMV of $2 billion and a net revenue of more than $65 million in CY (calendar year) 2021,” he had said.
Cars contribute almost 90% of Droom’s GMV, with two-wheelers comprising the rest. In terms of unit sales, cars make up twothirds and two-wheelers the remainder.