MUMBAI:US-based digital marketing company Cox Automotive has acquired a minority stake in Mahindra First Choice Wheels, the used-car retailing unit of Mahindra & Mahindra. The transaction, through a secondary sale, saw one of Mahindra First Choice’s early investors, HDFC, selling its entire 4 per cent stake. Phi Advisors, an initial private equity investor in the company, sold a little less than 4 per cent stake while retaining 25 per cent, while some other investors also sold small stakes, said a source. Cox Automotive and Mahindra confirmed the deals but didn’t disclose the stakes involved or the financial terms. Cox Automotive owns Auto-Trader, the largest digital automotive marketplace in the US, and vehicle research platform Kelley Blue Book. Mahindra First Choice owns IndianBlue-Book.com, an online vehicle valuation company. “There is an enormous global synergy building in this space. It is not a money-raising exercise. It is about bringing a strategic input,” Mahindra chairman Anand Mahindra told ET in an interaction. “It is not about an IndianBlueBook versus Kelly Blue Book at some point of time. This is the might of the Kelly Blue Book being thrown behind the IndianBlue-Book,” he added. Mahindra First Choice had raised Rs 94 crore from San Francisco-based hedge fund Valiant Capital in March. The deal gave Valiant 13.36 per cent, valuing the firm at about Rs 700 crore at the time. “Our investment in Mahindra First Choice Wheels furthers Cox Automotive’s strategic plans to create and grow usedvehicle marketplaces,” said Joe Luppino, chief corporate development officer at Cox Automotive. “This opportunity allows us to partner with a company in the fast-growing Indian automotive market.” The entry of Cox Automotive, a subsidiary of Cox Enterprises, which has also evaluated other investments in India, comes at a time when the older set of online second-hand car portals are consolidating. Mumbai based CarTrade acquired Carwale earlier this month, while CarDekho bought ZigWheels from Times Internet, part of the Times Group that publishes The Economic Times. Horizontal classifieds player Quikr has also been pushing into the market by heavily advertising its vertical platform, QuikrCars. Several startups have also entered the space, including peerto-peer car sales platform Zoomo, which is backed by Russian billionaire Yuri Milner and SAIF Partners. Others like Droom recently raised Rs 100 crore from Lightbox Ventures and Japanese internet firm Beenos Asia, while CredR raised Rs 96 crore from Fidelity Growth Partners India and other investors. Mahindra First Choice is one of the few companies in this space in India to be profitable. It reported profit of Rs 1.92 crore on revenue of Rs 44 crore in fiscal 2015. According to chief executive Nagendra Palle, revenue is expected to hit Rs 70 crore this year. Rajeev Dubey, CEO of the Aftermarket Sector at Mahindra, who has negotiated with Cox for about a year now on the deal, said the company doesn’t want to dilute its stake in the unit. Cox’s entry would help “widen and deepen” products, Dubey said.
Source: Economic TimesUS-based Cox Automotive buys stake in Mahindra First Choice
Industry: Automotive 2015-11-25
