Indian auto marketplace Droom eyes $135m from IPO early next year

Photo: Reuters

Droom, an online automobile marketplace, has hired investment bankers for a planned public listing worth about 1,000 crore as it seeks to join other startups rushing to tap a record stock market rally, two people aware of the matter said.

The company is likely to file draft papers for the initial public offering in the next couple of months, and the IPO could be launched in early 2022, one of the two people said.

“They have picked up two domestic investment banks, JM Financial and ICICI Securities, to begin work on their IPO,” the person said, requesting anonymity.

“The company plans to raise up to 1,000 crore through the IPO, which will be a mix of primary and secondary share sales,” the person said, adding that the initial public offering could see some of Droom’s existing investors pare their stakes.

Droom did not respond to an email seeking comment.

Droom, which began operations in 2014, raised the first tranche of its pre-IPO round in July this year, valuing the startup at $1.2 billion. New investors, including 57 Stars and Seven Train Ventures, took part in the round, along with some existing investors.

While the pandemic initially impacted sales of online platforms such as Droom, it made a sharp rebound since the end of last year as fears of infection spurred demand for personal mobility.

“Droom has witnessed a jump in used vehicle sales in H1 2021 due to a few factors, which includes people preferring ownership rather than shared mobility, uncertainties in economic condition due to the pandemic, and less depreciable value of used vehicle versus new vehicle. Most of the buying traffic on Droom came from Delhi, Hyderabad, Jaipur, Mumbai, especially for the petrol + manual variants,” the second person said.

“Droom has built the entire ecosystem around used automobiles for the digital economy, including first-mile services such as Orange Book Value (used vehicle pricing engine), ECO (vehicle inspection), History (historical records for used vehicles), Discovery (dozens of pre-buying research tools), mid-mile such as Financial Services (loan; insurance) and last-mile such as Droom Velocity for doorstep delivery,” the person said.

In a July interview, Droom founder and chief executive officer Sandeep Aggarwal said that the company’s annual run-rate is $1.7 billion for gross merchandise value (GMV) and $54 million for net revenue.

“The company remains on track to touch a GMV of $2 billion and a net revenue of more than $65 million in CY (calendar year) 2021,” he had said.

Cars contribute almost 90% of Droom’s GMV, with two-wheelers comprising the rest. In terms of unit sales, cars make up two-thirds and two-wheelers the remainder.

Though Droom has primarily been a used-vehicle platform, it has started selling new vehicles, too, in recent months.

Sales of new electric vehicles are where the company expects to see strong growth in the coming years.

Services is another big focus area for Droom as the company feels that this can help significantly boost its margins.

Aggarwal said that online shopping of automobiles is expected to grow to 7% of total transactions in 2025, up from 0.7% currently.

This article was first published on livemint.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.