CarDekho is in talks to raise $100 million in a Series D round, led by Chinese strategic investor Autohome Inc., valuing the online car marketplace at $700 million, said two people close to the deal, requesting anonymity.
Existing investor Sequoia Capital is also expected to invest from its $8 billion global growth fund, the people added.
“Sequoia is driving the discussions, given it is a common investor in both Autohome and CarDekho. This round is mainly being put together for the strategic investor to come in, with Autohome putting in $70 million,” said the first person cited above.
CarDekho and Sequoia declined to comment, while Autohome did not respond to an email seeking comment.
CarDekho currently sells both new and used cars on its platform and has seen strategic investor interest despite a continuing slowdown in automobile sales in India. Wholesale dispatches of passenger vehicles slumped 23.7% year-on-year in September, the 11th straight month of decline.
Even as overall automobile sales are slowing, online car sellers, who comprise a fraction of the market, are seeing strong growth driven by both new and used car sales.
“Demand for new cars, online at least, is quite strong for us right now, and the entry of new players is making the industry far better and more organized,” CarDekho’s co-founder and chief executive officer, Amit Jain said in an interview earlier this month.
While CarDekho receives interest from about 300,000 people each month in purchasing new cars, about 150,000 people evince interest in buying used cars, according to a person with direct knowledge of the matter.
CarDekho, owned by Girnar Software Pvt. Ltd, was founded in 2008 by Jaipur-based brothers Amit and Anurag Jain. It has raised about $185 million so far, with the last fundraise of $110 million in a Series C led by Sequoia India, China’s Hillhouse Capital, Google parent Alphabet’s growth investment arm Capital G and Axis Bank, in January. It was valued between $400-500 million at that time.
Tybourne Capital, a Hong Kong-based hedge fund, is also a common investor in both Autohome and CarDekho.
Autohome claims to be the leading online destination for automobile consumers in China. It provides professionally produced and user-generated content, a comprehensive automobile library, and extensive automobile listing information, covering the entire car purchase and ownership cycle.
CarDekho posted a 60% rise in revenue at ₹260 crore for the year ended 31 March, according to an Economic Times report. It however did not disclose profit or loss figures. In the previous year, the company had recorded a loss of ₹70 crore on revenue of ₹160 crore, Mint reported in January.
CarDekho is not the only online car retailer that is drawing investor interest.
Mint reported on 2 October that online used car retailer Spinny is in talks to raise $35 million in a funding round led by Fundamentum, a fund set up by Nandan Nilekani and former Helion Ventures partner Sanjeev Aggarwal, along with existing investors—Accel Partners, SAIF Partners and Blume Ventures.
Also, Cars24, which sells used cars to dealers, is currently raising its Series D round. It has already raised $52 million as part of the round, from Dubai-based cargo company KCK FZE and existing backer Kingsway FCI. Sequoia is an investor in Cars24 as well.
These investors are also being attracted by shift in user preference for used cars, given the current macroeconomic scenario.
The market for pre-owned cars grew from 0.8 time of new cars in 2012 to 1.2 times in the year ended March 2019, according to recent report by Edelweiss Securities. “The nature of the current slowdown coupled with slowing income growth, household savings and the evolving buyer profiles are likely to rev up used car sales at the cost of new car sales,” the report said.
This article was first published on livemint.com