IPO-Bound CarTrade To File Draft Red Herring Prospectus This Month

SUMMARY

The IPO will be a mix of a primary and secondary share sale. Investment banks Citi, Nomura, Axis Capital and Kotak Mahindra Capital are advising CarTrade on the IPO

CarTrade is an online automotive market for buyers and sellers of new and used vehicles

The company’s online car auction platform has a presence in 80 cities. As of last year, it claimed to be selling 1 Mn vehicles a year

Auto classifieds platform CarTrade is reportedly set to file its draft red herring prospectus (DRHP), which is the preliminary registration document prepared by merchant bankers for IPO-bound companies. The Securities and Exchange Board of India (SEBI) reviews the DRHP to check whether the company has made adequate disclosures.

“They are ready to file the DRHP. Final touches are being put on the document. It should happen in the next 10-15 days. This will be the first online auto classifieds company to go public in India,” a source told Mint, which first reported the development.

The IPO will be a mix of a primary and secondary share sale. Investment banks Citi, Nomura, Axis Capital and Kotak Mahindra Capital are advising CarTrade on the IPO, sources told the publication.

Founded in 2009 by Vinay Sanghi, CarTrade is an online automotive market for buyers and sellers of new and used vehicles. The company’s online car auction platform has a presence in 80 cities. As of last year, it claimed to be selling 1 Mn vehicles a year. More than 40 OEMs and 15,000 plus dealers work with the CarTrade Group and it has over 180 owned or franchisee stores.

In the fiscal year 2019-20, CarTrade’s car auction business formally known as CarTradeExchange saw its revenue increase by 22% year-on-year (YoY), from INR 10.66 Cr to INR 13.08 Cr. CarTradeExchange’s expenses also increased by 22% to INR 11.33 Cr in FY20 from INR 10.66 Cr the previous year. Thus, the company recorded a net profit of INR 1.06 Cr, a 32.5% increase from INR 80 lakh in FY19.

Previously, it has was reported that CarTrade is planning to go public by 2022 and has also set aside INR 400-450 Cr for acquisitions.

Inc42 had last year picked CarTrade as a soonicorn i.e. a startup that is expected to enter the unicorn club soon. The company’s last funding round was a venture round worth INR 180 Cr ($24.3 Mn) last month, led by IIFL and Malabar Investment Advisors. Before the funding round, CarTrade had a valuation of $936 Mn.

According to data on Crunchbase, to date, CarTrade has raised $307.4 Mn in eight funding rounds from nine investors. CarTrade competes with several other players in the online car marketplaces segment such as Quikr, Droom, Cars24, Olx and Mahindra First Choice Wheels.

Recent months have seen several Indian startups put their IPO plans to paper. Zomato recently filed its DRHP, while EaseMyTrip and Nazara had successful debuts on bourses.