Auto classifieds platform CarTrade files DRHP for Rs 2,000 crore IPO

Mumbai based automobile classifieds platform CarTrade has submitted a draft prospectus with the capital markets regulator to raise about Rs 2,000 crore through an initial public offering (IPO). 

The offer constitutes 26.96% of the post-offer paid-up equity share capital, at a face value of Rs 10, according to a draft red herring prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI). 

The issue will comprise an offer for sale of 1.23 crore shares by the company’s investors and promoters. 

Among them, Highdell Investment, an affiliate of private equity firm Warburg Pincus, will sell a total of 53.79 lakh shares; Temasek Holdings’ indirect wholly owned subsidiary MacRitchie Investments will offload 35.68 lakh shares; JP Morgan fund CMDB II will sell 16 lakh shares and Springfield Venture International, a venture capital fund operated by March Capital Partners, will offload 11.24 lakh shares. 

In addition, 3.3 lakhs of shares held by founder Vinay Sanghi and his family and, 3.4 lakh shares owned by other individual investors will be part of the offer.  

In total, 12 investors will offload their shares as part of the IPO. 

Highdell is the largest shareholder of the company owning 34.44%, followed by MacRitchie at 26.48%. CMDB II holds 11.93% of CarTrade and Springfield owns 7.09%. 

Axis Capital, Citigroup Capital Markets, Kotak Mahindra Capital Co, and Nomura Financial Advisory and Securities have been mandated to manage the public issue. 

The company recorded operational revenues of Rs 167.5 core for the nine months ended December 31, 2020; Rs 298.2 crore in financial year 2020; and Rs 243.2 in FY19. CarTrade became profitable in FY19 with a restated profit of Rs 26 crore. 

Citing a RedSeer report, the company claimed it is the only profitable automotive digital platform in the country. Its restated profit stood at Rs 85 crore in the first nine months of FY21 and Rs 31.9 crore in FY20. Its adjusted EBITDA was Rs 5 crore and Rs 72.3 crore respectively during the same period respectively. 

CarTrade’s revenues primarily come from commission and fees generated from auction and remarketing services of used vehicles; online advertising solutions across its platforms, lead generation, technology-based services, and inspection and valuation services. These services are offered to retail customers, dealers, banks and other financial institutions, insurance companies, OEMs, leasing companies, and fleet and individual operators. 

The company claimed its consumer platforms CarWale, CarTrade and BikeWale collectively registered an average of 29.96 million unique visitors per month in the same period. In the three months ended March 31, 2021, these platforms recorded an average of 31.99 million unique visitors per month and 814,316 vehicles were listed for auction in FY 2021. 

The company, operated by MXC Solutions India Pvt Ltd, was set up in 2009 by founder and chief executive Vinay Sanghi, who previously led Mahindra First Choice Wheels.  

About a month back, it raised $40 million from White Oak capital, IIFL Asset Management and Malabar Investment Managers. Prior to that, the company had raised over $45 million from Warburg Pincus, Temasek Holdings and March Venture Capital Management. It has raised nearly $340 million since inception.   

CarTrade competes with new and used vehicle marketplace Droom, Sequoia-backed Cars24 and PingAn-backed CarDekho.  

With the IPO, CarTrade will be the first automobile classifieds platform to go public in India. Other technology IPOs in the offing include Zomato, which filed its DRHP in April.