Also in this letter:
- Carlyle frontrunner to acquire Hexaware
- Startups driving India’s IPO frenzy
- ETtech Done Deals
Cars24 — an online marketplace for used cars — is in the final stages of closing a $300-350 million fundraise at a post-money valuation of $2 billion (about Rs 15,000 crore), underscoring the investor interest in this growing segment of India’s auto sector.
The investors: Existing investor DST Global is expected to lead the funding round, with participation of new backers like Falcon Edge Capital, Carlyle and SoftBank Vision Fund, sources told us.
Post financing, the company’s valuation is likely to rise to $2 billion.
About Cars24: Founded in 2015 by Chopra, Cars24 is a one-stop destination for buying and selling pre-owned cars, digitising the entire process of car ownership—from search to final purchase, including home delivery. In November, it drove into the unicorn club after raising $200 million at a valuation of over $1 billion. The round was led by DST Global.
The company clocked annualised sales of $600 million late last year compared to around $480 million in February. The Gurugram-based startup also offers financing to both dealers and buyers through its NBFC arm. CarTrade is also looking to diversify into retail of used two-wheelers and after sales service.
The used-car overdrive: The pre-owned segment of India’s auto industry has received a pandemic boost, as people are increasingly opting for personal mobility over public transport for commuting in the aftermath of localised lockdowns. Technology, too, is playing its role in organising a largely fragmented market.
- According to a report by management consultancy RedSeer, in 2019-20, Indians bought 1.6 used cars for every new car sold. That figure stood at 1.1 in FY16. The ratio stands at 2.6 in the US and UK.
Some other recent financing rounds in the sector:
- Droom, an automobile marketplace, recently achieved unicorn status after a pre-IPO funding round. The company wants to list on the Nasdaq.
- Spinny, an online used car marketplace, has raised $108 million in a Series D funding round led by New York-based Tiger Global.
- Just last week, CarTrade’s IPO—which offered shares in a price band of Rs 1,585-1,618 apiece—was subscribed more than 20 times.
Also Read: India’s tech-driven auto evolution
In other deals news:
■ Avendus Capital has achieved the first close of its Future Leaders Fund II at Rs 584 crore. The fund is looking to hit the final closure at more than Rs 1,000 crore, including a green shoe option, by the end of this fiscal, managing partner Ritesh Chandra said.
■ AgNext Technologies has raised $21 million from Alpha Wave Incubation and others in the largest Series A funding round for an Indian agritech startup so far. The company aims to expand to international markets, particularly the Middle East, Europe and South Asia, using the fresh capital.
■ Meamo, a meat delivery company, has acquired omnichannel meat provider ChopServe in an all-stock deal. The combined entity is now valued at $40 million. Meamo is now looking to raise $5-6 million from investors.
■ Education loan provider Eduvanz has raised Rs 100 crore in a Series B funding round led by Juvo Ventures, Sequoia Capital India and Unitus Ventures, among others. The startup plans to use the funds raised to launch new products and for expansion.
Carlyle emerges frontrunner to acquire Hexaware
- Carlyle’s offer trumps competition from Bain Capital and Paris-based technology company Teleperformance. All three, shortlisted for the final round of negotiations, submitted binding offers on Monday.
If the Carlyle offer gets accepted, it would be the largest private-equity buyout in the country outside of infrastructure, and also mark the US group’s biggest bet in the country.
Cash for deal: Carlyle is also negotiating with a host of banks to raise $1.2 billion in bridge financing for the acquisition that is likely to be taken out through a dollar bond issuance subsequently.
About Hexaware: The IT services company has been among the earliest mid-tier software service providers to successfully migrate from legacy offerings to cloud and automation, which enjoy higher margins and faster growth coupled with premier global clients.
- A formal announcement on the Hexaware-Carlyle deal is expected by August-end, save any last-minute glitches, sources said.
Meanwhile, Gartner has forecast that IT spending by India’s public sector is likely to grow 8.6% year-on-year to $8.3 billion in 2022, on the back of a digitalisation drive by various state and central government entities. The software segment of the IT industry is expected to clock the highest growth rate.
Tweet of the day
Apple urged to drop plans to inspect iMessages
More than 90 policy and rights groups around the world have published an open letter urging Apple Inc. to abandon plans for scanning children’s messages for nudity and the phones of adults for images of child sex abuse.
- Some overseas signatories in particular are worried about the impact of the changes in nations with different legal systems, including some already hosting heated fights over encryption and privacy.
The reaction: “It’s so disappointing and upsetting that Apple is doing this, because they have been a staunch ally in defending encryption in the past,” said Sharon Bradford Franklin, co-director of US-based nonprofit Center for Democracy & Technology.
The response: An Apple spokesman said the company had addressed privacy and security concerns in a document outlining why the complex architecture of the scanning software should resist attempts to subvert it.
Elsewhere, a Moscow court fined Google six million roubles ($80,881) for failing to delete content that Russia deems illegal, in the second such penalty to be imposed on the Alphabet Inc. company in less than a week.
The Tagansky District Court in Moscow said Google had been handed three administrative fines of 2 million roubles each. Google confirmed the fines, but offered no further comment.
An $8.8-billion IPO wave sweeps across India as startups soar
The market for initial public offerings in India is turning into a feeding frenzy.
The amount of money raised in IPOs this year has reached $8.8 billion, already surpassing the totals of the past three years though it’s only August. At the current pace, 2021 would exceed the all-time record of $11.8 billion. Founders, bankers, lawyers and advisers are racing to cash in on fervent demand for fresh public offerings.
- The catalyst, in a word, is Zomato, the food delivery startup that went public in July.
The country’s three most valuable startups are all considering or planning IPOs.
- Paytm, the country’s leader in digital payments, filed its preliminary IPO documents, aiming to raise as much as Rs 16,600 crore.
- Flipkart, the Indian e-commerce giant controlled by Walmart Inc., is aiming for an IPO as soon as the fourth quarter.
- Byju’s, an edtech startup valued at $16.5 billion, is in early discussions about an IPO but since it is in the midst of absorbing several substantial acquisitions, it is likely to hold off on any listing for at least a year. (read more)
Other Top Stories We Are Covering
■ Fintech startup Capital Float has partnered with Razorpay to extend its ‘buy now, pay later’ solution—Walnut 369—to all Razorpay-enabled online merchants.
■ CropIn, an agri-focused SaaS platform, has partnered with True Digital Solutions to enable digital transformation of the agriculture ecosystem in Southeast Asia.
■ India has been ranked second in terms of crypto adoption, amid a global bitcoin bull run this year, a new report by blockchain data platform Chainalysis showed.
Today’s ETtech Top 5 newsletter was curated by Tushar Deep Singh in Mumbai.