Tech star Cazoo set for £5bn New York listing
CAzoo will float on the stock market in New York in a deal that will value it at £5bn.
The online used- car seller, which was founded just over two years ago by entrepreneur Alex Chesterman, will go public through a merger with a special purpose acquisition company (spac) led by Us investor Dan och.
The deal will see Chesterman’s 25pc stake valued at £1.3bn.
Daily Mail owner DMGT has a 20pc holding now worth £980m – marking a significant return on its £117m investment. DMGT shares rose 7.7pc to 921p.
Cazoo became one of the world’s fastestever unicorns – a company with a $1bn valuation – when it reached the milestone last year after raising £25m from investors including Draper Esprit.
The British tech company sells used cars online and has so far delivered more than 20,000 vehicles. The firm employs 1,800 people around the world and expects to post revenues of close to £720m in 2021, which would represent 300pc growth in its second full year of trading.
Chesterman said: ‘This announcement is another major milestone in our continued drive to transform the way people buy cars across Europe.
‘We have created the most comprehensive and fully integrated offering in the largest retail sector which currently has very low digital penetration. This deal will provide us with almost one billion dollars of further funds to fuel our growth.’
The company is the latest technology star to take advantage of buoyant stock markets and float. But it is also another example of a UK tech giant turning London down. Chesterman said: ‘The UK is an amazing place to build a business but the iPo process is challenging for companies investing in high growth. it is just better understood by investors in the Us. Us investors understand better businesses investing in the short term for future growth.’
The former European Union commissioner Lord Hill called for a loosening of UK stock market rules, for example allowing dual class share listings, to encourage more entrepreneurs to list in London. Both Deliveroo and The Hut Group are barred from the FTsE 100 because their founders hold more voting rights, placing them outside the London stock Exchange’s strict rules.
Cazoo is also the latest firm to list via a spac or blank cheque company. Us investor och raised £540m for the spac before looking for potential investments. When a company like Cazoo merges with a spac, it becomes publicly traded by default. 2020 was the biggest year on record for spacs, with 165 registered.
Paul zwillenberg, chief executive of DMGT, said: ‘This is another great example of DMGT’s ability to identify and support disruptive early- stage businesses led by entrepreneurial management teams. We are delighted by the rapid progress the business has made and the capital appreciation on our £117m investment.’