Multi-brand used car seller Mahindra First Choice Wheels Ltd has secured $15 million (Rs 95.8 crore) from its existing investors, more than two years after its last round of external funding.
The transaction, which valued the company at $265 million, was entirely a primary infusion of capital, wherein Mahindra First Choice sold a 5.66% stake. However, the company did not divulge further details about the transaction or the names of investors who participated in this round.
The company’s existing investors include US-based digital marketing company Cox Automotive, private equity firm Phi Advisors and US-based hedge fund Valiant Capital.
The capital will be used to grow its franchise dealer network and invest in new technology-enabled products and services for the online consumer.
Mahindra First Choice Wheels CEO Nagendra Palle said the company has already achieved the 1,800-dealership target, set in March 2015, almost two years before the deadline, and is now planning to scale up operations further.
“With GST rates being rationalised, we want to utilise our deep technology expertise for retail and wholesale solutions, and grow to a network of 5,000 dealers in the next five years.â€
In November 2015, Cox Automotive had acquired a significant strategic stake in Mahindra First Choice for an undisclosed amount through a secondary sale of shares, which saw HDFC Ltd exiting the company and Phi Advisors selling a part of its holdings.
In March, the same year, Valiant Capital had invested $15 million (Rs 94 crore back then) in the company for a minority stake through a combination of primary and secondary sale, which saw the then existing investors, Mahindra and Mahindra, and Phi Advisors, making partial exits. The transaction had valued the company at $115 million, the company said.
Phi Advisors was the first institutional investor to have backed Mahindra First Choice with an investment of $9.21 million for a 31% stake in 2008, according to VCCEdge, the data research platform of News Corp VCCircle.
The company’s franchise network has a presence across more than 800 Indian cities and towns. It also runs online used vehicle auctions platform eDiig, vehicle inspections portal autoinspekt and vehicle pricing analytics site indiabluebook.
Mahindra First Choice is a subsidiary of Mahindra and Mahindra Ltd. As on 31 March 2017, the parent held a 48.68% stake in the company.
Its gross turnover stood at Rs 95.33 crore with a net loss of Rs 16.16 crore in 2016-17, according to the parent company’s annual report.
Recent deals
Companies operating in the used automobiles selling space include Truebil, Zoomo, CarDekho, Carwale and CarTrade, while OLX and Quikr are horizontal people-to-people selling platforms.
Last week, MXC Solutions India Pvt. Ltd, the operator of CarTrade.com and Carwale.com websites, had agreed to buy Shriram Automall, which sells used trucks, buses and other vehicles, for Rs 156.4 crore ($24.5 million).
Last July, online marketplace for automobiles Droom had raised $20 million in a Series C round led by Integrated Asset Management (Asia) Ltd and Digital Garage Inc.
In February 2017, Truebil, an online marketplace for pre-owned cars, had secured $3 million in a follow-on Series A round from China-based venture capital fund Shunwei Capital.