Prosus-owned OLX invests $400 million in FCG's used car business

OLX Group (OLX), the classified business of South African investor Prosus (earlier called Naspers), is investing $400 million to become the largest shareholder in online car marketplace Frontier Car Group (FCG).

In India, OLX and FCG have a joint venture that operates OLX CashMyCar stores across almost 17 cities. It competes with other used car players like Maruti's True Value, M&M First Choice, and Cars24.

The $400 million investment comprises a primary injection of capital in FCG, the contribution of OLX' joint-venture shares in India and Poland, as well as the acquisition of shares held by early investors subject to a tender offer process.

In India, it will help OLX CashMyCar consolidate its offline presence in the used car market. In the past year, OLX CashMyCar has grown to 75 stores across 17 cities in India with plans to expand to 40 cities with 150 such stores by 2021.

OLX, the fastest-growing global classifieds group, first invested US$89M in FCG in 2018, providing capital for the Berlin-based start-up to enhance its services and expand to new geographies, including the acquisition of WeBuyAnyCar in the United States. Both companies currently work together in Latin America, Asia, and Poland, where, collectively, nearly 30 million pre-owned cars are sold annually – more than double that of China.

Bhaskar Bagchi, General Manager, OLX Cash My Car, India said, “Our joint venture with FCG in India will enable us to grow OLX CashMyCar as the leading pre-owned car offline marketplace by offering a reliable and convenient service to the entire pre-owned car ecosystem comprising of car buyers, sellers and dealers.’’

Sujay Tyle, Co-founder and CEO of Frontier Car Group, said: "FCG has nearly tripled performance across every key metric since the first OLX Group investment less than 18 months ago and has expanded to four new countries in that time. This is a testament to FCG's team, the ripe market opportunity, and the results of early integration with OLX in our key markets. Together with OLX and Prosus, we are aiming to revolutionize the pre-owned car market in India by adding trust, transparency and a comprehensive suite of services to all participants in the ecosystem."