Cars24 to raise $350 mn; eyes a valuation of $2 bn
The country’s biggest online marketplace for used automobiles, Cars24 Services Pvt., is closing in on a deal to raise about $350 million from DST Global, Softbank Group Corp. and other investors, according to a person familiar with the matter.
The fundraising would also include Falcon Edge Capital and value the startup at close to $2 billion, said the person, asking not to be named because the details aren’t public. The funding now envisioned is larger than the $200 million to $250 million range Bloomberg News reported earlier. The round is expected to close in the next couple of weeks, the person said, though the details could still change.
Other investors including Moore Capital Management could join the deal, which could close in a few weeks, the person added.
Cars24 is starting conversations about an initial public offering and aims to go public in 18 to 24 months, the person said. India’s IPO market has surged and is on track for a record year.
Cartrade Tech Ltd, another online marketplace for cars, is expected to have its shares start trading August 20.
Cars24 and Softbank spokespeople declined to comment.
Demand for used vehicles has boomed in India as consumers try to avoid mass transit systems during the Covid-19 pandemic. The outbreak has hurt new auto sales, but costconscious buyers are looking for pre-owned cars.
Cars24 and DST Global representatives declined to comment. Moore representatives didn’t respond to emails seeking comment.
The company raised $200 million in a Series E round, in November last year, led by DST Global and existing investors including Exor Seeds, Moore Strategic Ventures and Unbound to become India’s first used car Unicorn.
The startup, based in Gurgaon on the outskirts of New Delhi, was founded in 2015 by Vikram Chopra, Mehul Agrawal, Ruchit Agarwal and Gajendra Jangid to make the used-vehicle trade smoother. Buying and selling cars in India has long been an anxiety-ridden, bumpy process dominated by street-corner mom-and-pop sales yards, with consumers distrustful of the pricing and the condition of the vehicle.
Cars24 aims to make the purchase of a pre-owned vehicle as easy as buying a refrigerator or a smartphone online. It prices vehicles based on AI algorithms and uses data to determine which car would give the new owner least trouble. The vehicles are refurbished in the company’s reconditioning facilities before being listed on its platform.
Cars24 has a seven-day no-questions-asked return policy and provides a six-month warranty. It also sells preowned motorcycles and scooters and offers financing.
The startup said earlier this month it has expanded to Australia and the United Arab Emirates and plans to enter other markets in the Middle East and Southeast Asia this year. In November, Cars24 said its website traffic had increased by four times since the start of the pandemic. Its existing investors include Sequoia Capital India, Exor Seeds, Kingsway Capital Partners and others.
Used-vehicle sales are booming in India because consumers are shunning mass transit systems to avoid catching Covid-19. While the pandemic has stymied sales of new autos, preowned cars are in demand as cost-conscious buyers seek value for money.