Auto portal CarTrade bets on services; may go for IPO in 2-3 years

Auto classifieds portal CarTrade.com, which might opt for an initial public offering in the next two years or so, is at present betting on tapping the services segment in used car financing. Founded and headed by Vinay Sanghi, CarTrade has recently launched a certification, valuation and transfer (of ownership) services about four weeks back to fill in a gap that it sensed existed in the used car financing space.

Besides, the company, which together with CarWale.com enjoys 75% of all online auto traffic is also looking at relevant acquisitions.

Vinay Sanghi, the founder and chief executive officer of CarTrade.com pointed out that while the market for used car finance in India is estimated to be around Rs 1.2 lakh crore, only about 8 per cent of the used cars sold is financed by an organised financier. This is because there is a dearth of solution-oriented services in the sector. The financier needs data on the value of the vehicles, its condition, certification, name transfer etc. 

"We have started working on these aspects for a bank or financier. We have piloted our auto finance services about a month back and provide services on certification, valuation and transfer," he said.

Besides being a point of customer origination, CarTrade.com also aims to evolve as a services provider as Sanghi feels that this is one of the largest consumer finance opportunities.

Meanwhile, his firm has also raised $145 million recently from investors led by Temasek to invest into new business areas and is also looking for relevant acquisitions. The portal which gets 15 million unique customers and 32 million visits per month is already a market leader. Sanghi claims that the existing business is profitable, and he does not need funds for that, however, it is looking at inorganic opportunities in the product, technology or content space.

He adds that the company has so far raised around $180 million and does not rule out going public to offer an exit to its investors. "We might go for an IPO to offer an exit to our investors, and that should be in the next two to three years time," Sanghi said. 

Warburg Pincus, JP Morgan, Temasek and March Capital Partners are among investors in CarTrade.com.

As on date, around 9,000 new and used car dealers are listed on CarTrade.com which includes 7,500 used car dealers.