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SoftBank’s Vision Fund and Tencent are among international funds investing $ 450 million in Indian online used vehicle seller Cars24 as the global chip shortage forces manufacturers to cut production of new vehicles on the market. one of the biggest markets in the world.
Yuri Milner’s DST Global and American Falcon Edge are also investing in a tower that values the six-year-old company at nearly $ 2 billion, doubling its valuation in less than a year.
India’s new car market, the world’s fifth largest, has been disrupted by production issues during the pandemic. Investors say this creates opportunities for used vehicles, especially the relatively young online market. Cars24 is India’s largest used vehicle website.
India’s largest automaker, Maruti Suzuki, reported nearly 20% drop in car sales in August after cutting production due to parts shortage, while other companies report long delays for new vehicles.
“All over the world, we are seeing the same thing happening with used cars,” Vikram Chopra, CEO and co-founder of Cars24, told the Financial Times. “We have seen a significant increase in the willingness of consumers to buy and sell cars online. We believe that will be the case in the times to come. It’s clearly accelerated.
Individuals including DoorDash CEO Tony Xu and US hedge fund billionaire Dan Och are investing in the cycle. Ritesh Agarwal and Yashish Dahiya, CEOs of Indian companies Oyo and Policybazaar, supported by SoftBank respectively, also participate.
SoftBank has invested in a number of online used car dealers around the world, including Chinese Chehaoduo, Mexican Kavak and Carro in Southeast Asia.
This is the last in a record year of fundraising for Indian start-ups, as venture capitalists and foreign investors invest funds in start-ups doing business online. Indian startups raised a record $ 7.2 billion in the quarter that ended in June, according to data provider Tracxn.
It’s a trend that has been reinforced by a regulatory crackdown on tech companies in neighboring China, with uncertainty prompting international investors to seek more opportunities in India. They hope that the increase in income and use of the Internet among the 1.4 billion people will make it one of their most lucrative markets for years to come.
“There’s a lot more interest than I’ve seen in the past four or five years combined,” Chopra said, adding that investor demand to participate in the cycle has exceeded supply by three times. “These guys strongly believe that cars [will] be sold online.
Tencent participates through a European entity. The severe restrictions on foreign direct investment from China introduced last year amid geopolitical tensions with India have killed much of Chinese investor activity. But Tencent has become increasingly active in recent months, especially through debt deals.