India’s biggest online marketplace for used automobiles, Cars24 Services Pvt., is closing in on a deal to raise about $350 million from DST Global, SoftBank Group Corp. and other investors, according to a person familiar with the matter.
The fundraising would also include Falcon Edge Capital and value the startup at close to $2 billion, said the person, asking not to be named because the details aren’t public. The funding now envisioned is larger than the $200 million to $250 million range Bloomberg News reported earlier. The round is expected to close in the next couple of weeks, the person said, though the details could still change.
Cars24 is starting conversations about an initial public offering and aims to go public in 18 to 24 months, the person said. India’s IPO market has surged and is on track for a record year. Cartrade Tech Ltd., another online marketplace for cars, is expected to have its shares start trading Aug. 20.
Demand for used vehicles has boomed in India as consumers try to avoid mass transit systems during the Covid-19 pandemic. The outbreak has hurt new auto sales, but cost-conscious buyers are looking for pre-owned cars.
The startup, based in Gurgaon on the outskirts of New Delhi, was founded in 2015 by Vikram Chopra, Mehul Agrawal, Ruchit Agarwal and Gajendra Jangid to make the used-vehicle trade smoother. Buying and selling cars in India has long been an anxiety-ridden, bumpy process dominated by street-corner mom-and-pop sales yards, with consumers distrustful of the pricing and the condition of the vehicle.
Cars24 aims to make the purchase of a pre-owned vehicle as easy as buying a refrigerator or a smartphone online. It prices vehicles based on AI algorithms and uses data to determine which car would give the new owner least trouble. The vehicles are refurbished in the company’s reconditioning facilities before being listed on its platform. Cars24 has a seven-day no-questions-asked return policy and provides a six-month warranty. It also sells pre-owned motorcycles and scooters and offers financing.