The initial public offering (IPO) of multi-channel auto platform CarTrade Tech began on Monday and is to be closed on Wednesday. Meanwhile, the company will carry out an offer for sale and reap the benefits of listing equity shares on stock exchanges.
The lead managers for CarTrade’s public offering are Axis Capital, Citigroup Global Markets India, Nomura Financial Advisory and Securities (India), and Kotak Mahindra Bank, with Link Intime India serving as the registrar.
The company’s initial public offering (IPO) will be an OFS of 18,532,216 equity shares worth Rs 2,998.51 crore by promoters and existing shareholders.
Springfield Venture International, Macritchie Investments, Shree Krishna Trust, Victor Anthony Perry III, CMDB II, Highdell Investment, Bina Vinod Sanghi (Jointly Held with Vinay Vinod Sanghi), Vinay Vinod Sanghi (Jointly Held with Seena Vinod Sanghi), and Daniel Edward Neary are among the investors in the OFS.
The Mumbai-based marketplace has allocated 50% of the primary market offering to qualified institutional buyers (QIBs), 15% to non-institutional investors, and 35% to retail bidders. However, it will not receive any IPO proceeds because it is merely an offer for sale rather than a new issue of shares.
CarTrade has set a price band of 1,585-1,618 per share and hopes to raise around 3,000 crores at the upper end of the price band. On August 23, the shares, expected to be listed on the stock exchanges.
Whereas the basis of allotment will most likely be finalized by August 17, the initialization of refunds will most likely be completed by August 18, and the credit of shares in the demat account will most likely be completed by August 20.
CarTrade, which was founded in 2009, is backed by well-known investors such as Warburg Pincus, Temasek, JP Morgan, and March Capital. The company owns platforms that facilitate the purchase and sale of new and used automobiles, and was the only profitable automotive digital platform in FY20, according to a RedSeer report.
Customers, OEMs, dealers, banks, insurance companies, and other stakeholders are all connected through the company’s automotive digital ecosystem.
The company has been operating various brands – CarWale, CarTrade, Shriram Automall, BikeWale, CarTradeExchange, Adroit Auto, and AutoBiz – to enable new and existing automobile customers, vehicle dealerships, vehicle original equipment manufacturers (OEMs), and other businesses to buy and sell their vehicles simply and efficiently.
As of June 30, 2021, its consumer platforms, including CarWale, CarTrade, and BikeWale, had an average of 2.7 crore unique visitors per month, with more than 88 percent of visitors coming from organic searches.
Aside from increasing the average number of unique visitors, the company has also been able to increase the number of listings on its online and offline platforms from 7 lakh in FY19 to 8.1 lakh in FY21.
The majority of the company’s revenue comes from commissions and fees from the auction and remarketing of used vehicles for retail customers, banks, and other institutions.
In FY21, revenues from this segment accounted for more than 57% of total revenues. Furthermore, the company generates 35% of its revenue by providing OEMs with online auto advertising, lead generation, and technology services (original equipment manufacturers). The remaining revenue is generated by valuation and inspection services provided to institutions.
Besides, CarTrade has a large online presence as well and a low-asset business model. It also runs 114 auto malls, the majority of which are leased or rented from third parties.
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