Cars45’s Parent Company Raises $400 Million from OLX Group

Cars45’s Parent Company Raises $400 Million from OLX Group

It is simply amazing. Cars45 through its parent company, Frontier Car Group, has raised $400 million from OLX Group, valuing the business $700 million. Cars45 is a very fascinating startup  – it buys, sells, swaps  your used car within 45 minutes. Innovation is not just about technology. Cars45 is innovating on business model. Hybrid is in the gene and Cars45 is a category-king company. OLX Group is part of the largest company in Africa, by direct and indirect market caps – the Naspers from South Africa. Cars45 is Berlin-headquartered!

Frontier Car Group, the parent firm of Cars45 parent firm has raised $400 million from OLX Group, a Prosus classifieds business. Prosus is a European unit run by South African media giant Naspers.

Frontier Car Group’s Cars45 has operations in Kenya and Nigeria and is looking to work with OLX Group to expand operations in emerging markets.

The Frontier Car Group will use OLX Group’s US$400 million to fuel expansion in emerging markets. The $400m investment, comprising a primary injection of capital in FCG and the contribution of OLX’s joint-venture shares in India and Poland, as well as the acquisition of shares held by other investors, founders and management making OLX Group the largest shareholder in FCG and puts the valuation of FCG at $700m.

About Cars45 from its website.

We are Nigeria’s largest car auction service provider with the goal of helping hundreds of customers to sell their cars.At Cars45 our passion is to build the infrastructure for commerce that allows sellers and buyers of Nigerian used Cars to exchange value quickly, cheaply and with unhindered access to independent relevant information required for decision making. We have inspection centres at strategic locations to make it easy for our dear customers to sell their cars.

Press Release

FILE PHOTO: Bob van Dijk, CEO of Naspers and Prosus Group poses at Amsterdam’s stock exchange, as Prosus begins trading on the Euronext stock exchange in Amsterdam, Netherlands, September 11, 2019. REUTERS/Piroschka van de Wouw/File Photo

 

In 2018 OLX’s venture arm invested $89 million in FCG, a start-up co-founded in 2016 by 26-year-old American CEO Sujay Tyle with emerging market specialist Peter Lindholm and chief technology officer Andre Kussmann.

BERLIN (Reuters) – Prosus PRX.AS classifieds unit OLX Group will invest up to $400 million in Berlin-headquartered used car trading platform Frontier Car Group (FCG) and combine their operations across emerging markets.

That helped FCG expand from four markets to 10: Argentina, Chile, Colombia, India, Indonesia, Mexico, Nigeria, Pakistan, Poland and the United States.

“They have blown all my expectations out of the water,” OLX Group CEO Martin Scheepbouwer told Reuters. “So I said to Sujay, what more can we do?”

OLX will inject capital in exchange for new shares and a tender offer to buy out existing shareholders. The partners will also fold in their joint ventures in India and Poland.

It’s not clear what stake OLX will hold after its investment but it expects to be the largest shareholder.

BUSINESS MODEL

FCG’s approach is similar to that of another Berlin start-up, AUTO1, which is backed by Japan’s Softbank Group.

FCG allows sellers to request a quick online valuation before bringing their car in to an inspection center for an estimate that serves as the basis for an on-the-spot sale to a dealer or private buyer.

“That provides a superior experience for many people, especially in emerging markets where there’s a lack of transparency, a lack of trust and a lack of infrastructure,” Scheepbouwer said in an interview.

FCG employs 1,700 people and runs 500 inspection centers. The company has turned over $700 million in the past 12 months, tripling its revenue.

Tyle said FCG is “very much about how we can be the most trustworthy,” something that is especially important in countries where doing cash deals can be a dangerous undertaking.

Amsterdam-listed Prosus was spun out of South African Internet giant Naspers and holds a stake in Chinese tech giant Tencent.

 

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