CarTrade aims IPO route – the first among auto classifieds

CarTrade, an online auto classifieds platform which is backed by Warburg Pincus-an american private equity giant, Temasek-Singapore’s state investor, JPMorgan and March Capital Partners, has come up with an IPO. It has filed a draft red herring prospectus with the SEBI to raise close to Rs2000 crores. 

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CarTrade is a classifieds platform helping its users to find new and used cars. It claims to be on a top position, when it comes to online search popularity through its platforms-CarWale and BikeWale. There are few other known platforms under its name like CarTrade Exchange, Shriram Automall, AdroitAuto and AutoBiz.

The major competitors over which it has an upper hand include Cars24, Droom, Quikr, Olx and Mahindra First Choice Wheels. It had acquired one of its competitors CarWale from German media conglomerate Axel Springer for Rs.590 crore in November 2015. In January 2018, it grabbed a 51% stake, for about Rs.157 crores in Shriram Automall India Private Ltd., known for vehicle auctioning.

During April this year, CarTrade raised $25 million led by IIFL and Malabar Investment Advisors. Resultantly its value reached around $ 1 billion. 

The IPO consists of a pure offer for sale of Rs.12,354,811 equity shares. This will facilitate partial exit for Warburg Pincus-(CarTrade investors), March Capital and others.

Highdell is the company’s biggest shareholder selling its biggest stake-5,379,055 equity shares followed by MacRitchie selling 3,568,217 shares. Next come CMDB and Springfield.

CarTrade was founded in 2009, and it has a network of more than 4000 dealers till date. Over 4 million customers visit the platform every month, making it the biggest structured platform for buying and selling vehicles. 

The portal provides used car information, certified used cars, on road dealer prices and reviews by experts to help potential customers. It also gives information about the automobile industry and the latest news about the same. Reviews of upcoming models are also available on the portal.

CarTrade has two distinctive parts, and The former is used to buy and sell new as well as used cars and the latter is meant for the dealers who can manage their business operations through it.

Axis Capital, Kotak Mahindra Capital, Nomura and Citi are liekly to be the investment banks. Similarly, Cyril Amarchand Mangaldas is going to be the company counsel, Indus Law to be the counsel to the ibanks and AZB & Partners counsel to some of the selling shareholders, as per reports.

The company’s business expanded with total income growing at a CAGR of 45.94% between financial years 2018-2020. At the end of FY 2020, the company’s total income was Rs.137 crore and a net profit of Rs. 8.88 crore.

In 2021, the company changed to CarTrade Tech Pvt Ltd. Previously known as Kaymo Fastener Company Pvt. Ltd in 2000 and then changed to MXC Solutions India Pvt Ltd in 2009.

As per company resources the pandemic has given a strong push to personal mobility as has been seen by the auto sales numbers in the last couple of quarters. It has also made digital a very prominent channel buying and selling cars. These trends will provide tailwinds for the company to grow stronger in the coming years.

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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