Prosus arm OLX Group to buy controlling stake in FCG for $400 mn

OLX Group, the classifieds business unit of Naspers-owned global consumer internet group Prosus, will invest $400 million in Berlin headquartered online car marketplace Frontier Car Group (FCG) in a deal that involves primary and secondary issue of shares.

The deal will see OLX directly inject capital in FCG and acquire shares held by other investors, founders and management, through a tender offer process. On the completion of the transaction, OLX will become the largest shareholder in the Frontier Car Group, said a joint statement from the two companies.

FCG was founded in 2016 by Sujay Tyle, former COO of Hired.com; Peter Lindholm, former Millicom investment director; Andre Kussmann, former Auto1 Engineering Director; Eyass Shakrah, former Avito COO; Peter Malmqvist, former Auto1 Finance Lead; and Ricardo Donoso, former Celmedia and Azumi co-founder. The company has raised more than $150 million from investors such as TPG Growth, Fraser McCombs Capital , Hummingbird Partners, Balderton Capital, Partech Ventures, and Naspers.

Last year, OLX invested $89 million in FCG chiefly to aid the latter’s acquisition of US-based online car platform WeBuyAnyCar.  

“The deal will strengthen the already successful partnership between the two companies and help to accelerate FCG’s ranking to one of the top five car marketplaces worldwide,” the statement said.

FCG’s platform offers car dealers access to a range of car inventory, proprietary inspection reports, floor-plan financing, pricing guides and other innovative services. On the other hand, sellers can avail services such as guaranteed buy, inspection, financing, warranties and insurance.

Going forward, OLX plans to absorb FCG to benefit from improved synergies such as enhanced market intelligence, resale capability, and voluminous pricing data. 

“We are aiming to build the leading global used car marketplace, offering a premium and convenient service to millions of car buyers, sellers and dealers. We are in a unique position to accelerate the expansion of this platform worldwide,” said Martin Scheepbouwer, chief executive officer of OLX Group. 

Globally, OLX Group claims to facilitate 17 million online exchanges each month across categories such as cars, furniture, electronics and clothing. In India, OLX has a joint venture with FCG called CashMyCar, an offline store for pre-owned cars. It claims that CashMyCar has seen a three-fold increase in the number of stores in India over the past year, with car purchase volumes continuing to grow by 10% every month.

Recently, OLX India, the local unit of OLX Group roped in Bhaskar Bagchi as general manager at CashMyCar.

In India, Euronext-listed Prosus, through its investment arm Prosus Ventures, holds stakes in several startups such as ed-tech unicorn Byju’s, social commerce platform Meesho, and logistics platform Elastic Run. In 2018, Prosus scooped up $1.6 billion from the exit of ecommerce major Flipkart, which was acquired by US-retail giant Walmart.