SoftBank and Tencent invest in Indian used-vehicle platform Cars24


Indian business & finance updates

SoftBank’s Vision Fund and Tencent are among the international funds investing $450m in Indian online used-vehicle seller Cars24 as the global chip shortage forces manufacturers to cut production of new vehicles in one of the world’s largest markets.

Yuri Milner’s DST Global and the US’s Falcon Edge are also investing in a round that values the six-year-old company at almost $2bn, doubling its valuation in less than a year.

The market for new cars in India, the world’s fifth-largest, has been roiled by production issues during the pandemic. Investors say this is creating opportunities for second-hand vehicles, particularly the relatively young online market. Cars24 is India’s largest website for used vehicles.

Maruti Suzuki, India’s largest carmaker, reported an almost 20 per cent drop in car sales in August after it cut output because of a parts shortage, while other companies are reporting lengthy delays for new vehicles.

“The world over we’re seeing the same thing happening with pre-owned cars,” Vikram Chopra, chief executive and co-founder of Cars24, told the Financial Times. “We have seen a significant rise in the consumer readiness to buy and sell cars online. We believe that’s how it will be in times to come. It’s clearly accelerated.”

Individuals including DoorDash chief executive Tony Xu and US hedge fund billionaire Dan Och are investing in the round. Ritesh Agarwal and Yashish Dahiya, chief executives of SoftBank-backed Indian companies Oyo and Policybazaar respectively, are also participating.

SoftBank has invested in a number of online used-car vendors around the world, including China’s Chehaoduo, Mexico’s Kavak and Carro in south-east Asia.

It is the latest in a record-breaking year of fundraising for Indian start-ups, as deep-pocketed venture capitalists and foreign investors pour funds into young companies doing business online. Indian start-ups raised a record $7.2bn in the quarter that ended in June, according to data provider Tracxn.

It is a trend that has been bolstered by a regulatory crackdown on technology companies in neighbouring China, with the uncertainty prompting international investors to scout for more opportunities in India. They hope that rising incomes and internet usage among the 1.4bn population will make it one of their most lucrative markets for years to come.

“There is significantly more interest than what I have seen in the last four or five years combined,” Chopra said, adding that investor demand to participate in the round outstripped supply by three times. “These guys are big believers in the fact that cars [will] get sold online.” 

Tencent is participating through a European entity. Tough restrictions on foreign direct investment from China introduced amid geopolitical tension with India last year killed off much Chinese investor activity. But Tencent has become increasingly active in recent months, including through debt deals.


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