Online car buying portal CarTrade will apply for a non-banking finance company (NBFC) licence, a top company executive said, in a bid to muscle into the $30 billion used car market in the country.
The online automobile classifieds firm has also set aside ₹400-₹450 crore to acquire a string of small companies, said Vinay Sanghi, the managing director of CarTrade.
“We are applying for licence with the banking regulator (Reserve Bank of India) and expect to start our NBFC soon,” he said.
The company is also planning an initial public offering (IPO) in 18-24 months to provide an exit option to some of its investors, Sanghi added.
CarTrade is backed by Singapore government’s investment vehicle Temasek and private equity firm Warburg Pincus, among others.
It has already tied up with various banks and financial institutions to help car buyers, but the company wants to venture on its own sensing a big opportunity in the used vehicle financing business.
“We are putting together a team for the new venture,” Sanghi said.
According to its own estimates, the used vehicles market is worth around $30 billion in India, with almost 5.5 million cars — each averaging around ₹6 lakh — sold annually. “Only 5% of the market gets organised funding and that leaves a big opportunity to plug,” Sanghi said.
The company, which counts PE funds such as Warburg Pincus, Tiger Global, JP Morgan and March Capital as investors, raised $55 million led by Temasek in February 2017. It has so far raised ₹950 crore across various funding rounds.
In November 2015, the company acquired rival CarWale from German media conglomerate Axel Springer for ₹590 crore in an all cash deal. It also bought vehicle inspection and valuation company Adroit Inspection in 2016 for an undisclosed sum.
CarTrade has accumulated a war chest of around ₹400-₹450 crore to fund its acquisitions. “There are some business gaps that we are looking at filling with a string of acquisitions in the vehicle servicing and insurance space,” Sanghi said, adding the company would spend around ₹100 crore on each small deal.
CarTrade’s current gross merchandise value (GMV) is around $3 billion. It is expected to close the current financial year with revenues of around ₹425 crore and a profit of ₹125 crore, making it one of the few profitable e-commerce companies in India.
“The company expects to have a GMV of around $4.5 billion with revenues of around ₹650 crore and PAT (profit after tax) of ₹200 crore by FY21,” Sanghi said.
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