Mumbai-based CarTrade, an online marketplace of new and used vehicles, has filed a draft red herring prospectus (DRHP) with Indian market regulator SEBI on Monday.
In its filing, the Temasek-backed startup said the initial public offering is going to be an Offer for Sale, which will comprise 12,354,811 equity shares of existing shareholders. These include marquee investors Warburg Pincus LLC (Highdell Investment Ltd), Temasek (MacRitchie Investments Pte Ltd), JP Morgan (CMDB II), and March Capital (Springfield Venture International). Vinay Sanghi, the promoter and founder of CarTrade, along with his family members, will also sell off a portion of his stake.
While CarTrade did not disclose the price band for the sale of equity shares, it said the face value of the shares is prescribed at INR 10. But according to a report by local media Economic Times, the share sale can garner up to INR 2,000 crore (USD 273 million).
Listing its shares on India’s bourses will not lead to fundraise for CarTrade, instead it will give exit to its existing backers.
“We will not receive any proceeds from the Offer for Sale. The Selling Shareholders will receive the net proceeds from the Offer for Sale,” it said.
Founded in 2009 by Sanghi, former CEO of Mahindra First Choice, and Rajan Mehra, former country head of eBay India, CarTrade lets consumers buy and sell old two-wheelers and cars as well as purchase new vehicles. Apart from this, it also allows users to participate in online auction of used vehicles. It works directly with OEMs (original equipment manufacturers) and other stakeholders in the auto industry to let them sell vehicle spare-parts. It operates separate platforms for each offering such as CarWale, BikeWale, CarTrade, Shriram Automall, CarTrade Exchange, Adroit Auto, and AutoBiz.
The company said in the three months ended March 31, 2021, its platforms had an average of 31.99 million unique visitors per month. The company, which competes with players like CarDekho, Droom, Cars24, among a few others, added it was the only profitable digital auto platform for FY 2020.
For the year ended March 31, 2020, CarTrade’s consolidated income stood at INR 3,184.45 million (USD 43.4 million), while its restated profit was INR 312.94 million (USD 4.2 million), according to the DRHP. In the nine months ended December 31, 2020, the company’s restated profit rose to INR 850.53 million (USD 11.6 million) on the back of INR 1,896.05 million (USD 25.8 million) income.
The startup, which counts Canaan Partners, Epiphany Overseas Ventures, March Capital, Austin Ligon, Tiger Global, and Warburg Pincus as its backers, recently raised USD 25 million from Malabar India Fund and IIFL for business expansion.
The latest funding round nearly doubled its valuation to USD 967 million from USD 525 million in June 2020 when the company had landed INR 3.2 billion check in Series H. The 12-year-old firm is now an inch away from becoming a unicorn. However, it said the ongoing pandemic can mar its future prospects.
“The COVID- 19 pandemic has affected and may continue to affect our business, results of operations, cash flows, and financial condition,” it said in the filing.
While the healthcare crisis in the country caused “a material decline in general business activity, including weaker demand for personal mobility during the first few months,” it led to “a closure of our offices and automalls and we moved to a work-from-home model.”
Although the company said it resumed operations in a staggered manner earlier this year, the second wave of corona “could result in complete or partial closure of” its offline operations.
The company further added that the pandemic may affect our ability to execute our growth strategies and expand into new products and services.
“The potential negative impact on the health of our personnel, particularly if a significant number of them are afflicted by COVID-19, could result in a deterioration in our ability to ensure business continuity during this disruption,” it said. The company also expects inherent productivity, connectivity, and oversight challenges due to an increase in the number of individuals working from home.