Southeast Asian used car trading platform Carsome is in talks with investors to raise over $200 million in a pre-IPO round, multiple sources aware of the matter told DealStreetAsia. The round will value Carsome at over $1 billion, making it the first Malaysia-born unicorn since ride-hailing giant Grab.
According to one direct source close to the development, the round will be joined by financial investors and strategic investors with strong industrial resources and synergies. The source added that there will be “more than one big-ticket round in the coming months”.
Most of Carsome’s existing investors, which includes names like Asia Partners and Burda Principal Investments, are likely to be topping up pro-rata in the firm. The round, however, is still in the midst of being finalised with the board likely to make a call around the end of this month.
Carsome declined to comment for this story.
The funding will help Carsome leverage new opportunities such as M&As as well as expansion into new markets such as the Philippines. Its last fundraising round was a $30 million Series D round led by Asia Partners in December last year.
The other investors on its cap table include Japan’s MUFG Innovation Partners, Daiwa PI Partners, Endeavor Catalyst, Ondine Capital, Gobi Partners, and Convergence Ventures, all of whom had invested in its Series C round in December 2019 when it raised $50 million in equity and debt funding.
Firm on IPO plans after COVID boost
Carsome is also actively weighing its options for a US public listing in 2022, either via a special purpose acquisition company (SPAC) or a traditional IPO, added a separate source. The firm is understood to be ahead of its own timeline in terms of revenue and company readiness, and as such, is moving ahead with plans to list next year.
The same source revealed that the firm’s annualised revenues have already hit $800 million this year, selling 10,000 cars per month across its four markets — Malaysia, Indonesia, Thailand, and Singapore. Much of this growth has been supported by shifts in consumer behaviour during the COVID-19 outbreak, as price-conscious Southeast Asian consumers ditched ride-sharing and public transport for used cars.
Carsome chief executive Eric Cheng had stated that the company doubled its monthly revenue in the previous six months, while announcing its Series D funding last December. The firm claimed it recorded its highest-ever quarterly revenue in Q3 2020.
In December 2020, in an interview to Financial Times, Cheng said the company had plans to list in the US in 2022. “The pandemic has definitely accelerated our business…we want to list on a major exchange like the Nasdaq.”
Founded in 2015 by Cheng and Teoh Jiun Ee, Carsome provides end-to-end solutions for car buyers and dealers, beginning with vehicle inspection to ownership transfer and car financing. Carsome works with over 8,000 used car dealers who have collectively made more than 2.3 million bids, according to its website.
Car marketplace models like Carsome’s have been around in many markets globally, some of which have already gone public or are close to an IPO listing. These include names like Carvana in the US, Chehaoduo in China, and Cars24 in India.
In Southeast Asia, Carsome has a few competitors such as Singapore-based Carro, which on Tuesday announced that it had raised $360 million in a Series C round to enter the unicorn club. Last October Carro had raised S$150 million ($110.5 million), which included $11 million in equity from Mitsubishi Corporation, MS&AD Ventures, SoftBank Ventures Asia, and Golden Gate Ventures.
Other regional competitors include Indonesia’s OLX Auto (formerly Belimobilgue) and Carousell Auto Group, the car business unit of Singapore-based online classifieds firm, Carousell.