Cars24 Expects to File IPO by April After Reverse Flip to India

Cars24 Plans IPO Filing by April Following Reverse Flip to India

The used-car marketplace Cars24 is gearing up for an IPO filing in India, aiming to capitalize on its recent corporate restructuring.

Reverse Flip to India: A Strategic Move

Cars24, which was initially incorporated in Singapore in 2015, has received approval to re-domicile to India. This reverse flip process, similar to moves made by other tech giants like Flipkart and Myntra, is expected to take between six to nine months. According to CFO Shivanshu Makkar, the company will be eligible to file its DRHP once the transition is complete, aiming for an April timeline.

Funding and Expansion Plans

Cars24’s last funding round in 2022 valued the company at $3.3 billion. Makkar noted that the company has not sought additional funding since then, as it currently has sufficient capital. The upcoming IPO is not primarily driven by an immediate need for funds but rather as a strategic move to bolster expansion efforts in India and potentially new markets.

Makkar emphasized that the IPO would serve as a “war chest” for deeper penetration into the Indian market, where car ownership remains low—only five out of 100 Indians own a car. The company aims to increase its presence from 25 cities to 200, significantly expanding its operational scale.

Valuation and Governance Considerations

While discussing potential valuation at the time of listing, Makkar stated that there is no specific target in mind. He views the IPO as a means to provide liquidity to shareholders and employees, rather than merely an exercise in valuation. The governance benefits associated with becoming a publicly listed entity are also a significant factor in the decision to pursue an IPO, as it would enhance the company’s credibility and governance standards.

International Expansion Plans

Beyond its focus on the Indian market, Cars24 is eyeing further expansion in the Gulf region and Australia. In the UAE, the company holds approximately 7% of the used-car market and is experiencing growth rates of nearly 30%. In Australia, Cars24 has already made inroads into three cities, indicating a broader strategy to capture international markets.

Key Highlights

• Cars24 plans to file its DRHP by April after completing a reverse flip to India.
• The company’s last funding round in 2022 valued it at $3.3 billion.
• IPO proceeds will primarily support expansion in India and new markets.
• Cars24 aims to increase its presence from 25 to 200 cities in India.
• The company is also expanding into the Gulf region and Australia.

Investor Note: Cars24’s upcoming IPO represents a significant step in its growth strategy, focusing on expanding market presence in India and beyond. Investors should monitor the company’s progress in its reverse flip and subsequent filing, as well as its performance in international markets.