Cars24, an online platform for selling used cars, is in the advanced stages of talks to close a $250-300 million funding led by its existing investor Falcon Edge, multiple matters said.
Founded in 2015 by Vikram Chopra, Mehul Agrawal, Ruchit Agarwal and Gajendra Jangid, Cars24 became a unicorn last year in a $200 million funding round led by DST Global.
If the round goes through, Cars24 valuation is likely to increase to $3-3.3 billion, up from in September when it closed a $450 million financing from SoftBank Vision Fund II, Falcon Edge and Yuri Milner’s DST Global.
“Unlike the last round, Falcon is cutting the single largest cheque this time. Rest of the existing investor will be participating in it,” a person aware of the matter said. Its September funding round also included a $110 million debt component.
Aided by the covid-19 pandemic, the used car mart is seeing accelerated growth and the space has been players like Spinny raking in capital from investors such as tiger global doubled down in its investors such as Tiger Global doubled down on its investments in Spinny Co-leading a $285 million series-E funding round along with Abu Dhabi based ADQ, Making it a unicorn at a valuation of $75 billion. Besides Spinny, Cars24 competes with firms such as CarTrade, Cardekho and others.
“They (Cars24) are selling about 20,000 cars in a month now compared to 15,000 per month at the beginning of the year. It made a faster recovery from the second wave of the Covid-19 pandemic than the first one. The new capital will also be used for further expansion in the Middle East and Southeast Asia,” a person aware of its plans said.
When contacted, a Cars24 spokesperson declined to comment, while an email sent to Falcon Edge did not elicit any response till press time on Sunday.
Cars24 entered Thailand in November and it is present in UAE and Australia. “It is looking to enter more countries in Southeast Asia and the Middle East over the next two quarters. Parts of new capital will be utilised for international expansion besides doubling down on the domestic market,” this person added.
The company, which holds a dominant market share in India, may also consider acquiring smaller players in the global markets to support its international expansion.
Cars24 is setting up around seven large-scale refurbishing labs across the country to improve the quality of cars before they are sold to the customers, sources added. The new facilities are live in Delhi NCR, Mumbai, Ahmedabad and Chennai, according to people mentioned above.
It has also started selling two-wheelers, which are currently available in Delhi NCR but is expected to be expanded further in India, people aware of its plans said.
Besides selling cars and bikes, it also has a non-banking financial company licence through which it offers vehicle purchase financing. Sources said it is looking at its lending arm distribution to be expanded through investment and acquisitions in NBFCs.
As per a recently released report by classified firm OLX Autos and ratings and research firm CRISIL, the Indian used car market is expected to reach a size of over 70 lakh vehicles by 2025-26, up from 38 lakh in 2020-21, growing at around 12-14% over the next few years.
“The pre-owned car industry is expected to clock a growth rate of 15% in FY22 as the Covid-19 pandemic, digitalisation, changing demographics and aspirations, first-time buyers and availability of financing options are acting as growth drivers,” the report added.