Cars24 expects to be eligible to file DRHP by April: CFO Shivanshu Makkar

As per the latest business developments, Cars24 anticipates to be eligible to file its draft red herring prospectus (DRHP) by April after completing its reverse flip from Singapore to India, a process that could take six to nine months, its CFO Shivanshu Makkar stated.

In an interview with PTI, Makkar stated Cars24, which was incorporated in Singapore in 2015, has received approval for the reverse flip and will file papers for its IPO in India.

"On the IPO, we are a Singapore-based entity. We had set up back in 2015 in Singapore. So, we are re-domiciling right now. It's a reverse flip process, like the process that Flipkart and Myntra did.

"We have gotten our approval from Singapore, and we are filing in India. This will take anywhere between six to nine months. After the day we become an Indian entity is when we can file the DRHP. So, by April, we would be eligible to file a DRHP. From there, it takes around three to four months for Sebi approvals, pricing, book-building and all. So, that's the kind of timeline I'm looking at right now," Makkar stated.

Cars24's last funding round was in 2022 at a $3.3 billion post-money valuation. Makkar stated the firm has not boosted fresh capital since then as it has not required additional funding.

"The last round was boosted in 2022 at a $3.3 billion post-money valuation. We haven't done any (external funding) round since then because we haven't required the capital. We are still sitting on decent enough capital.

"So, when we do an IPO, it would be to either expand into new geographies or go deeper into the Indian geography for expansion. We are not burning any cash right now, so I don't need cash to burn," he stressed.

Makkar stated Cars24 is considering a potential IPO mainly as a means to create capital for expansion in India and new geographies, rather than to meet an immediate funding need.

"The primary purpose of the IPO would mostly be to create a war chest to go deeper into India and make sure we are able to ensure that the next 20 crore Indians are able to buy a car. Right now, if you look at this industry, five out of 100 Indians own a car. So, the headroom is massive.

"The tailwind and headroom both are insane. So, to go into newer cities, I'm right now in 25 cities in retail. Maybe I go to 200 cities and around 50,000 cars. So, for that, the primary capital would be used," he stated.

Asked around the valuation at which Cars24 would seek to list, Makkar stated there was no target at present and that he did not view an IPO as an end goal or valuation exercise.

"For me, the IPO is a way to provide liquidity to the shareholders and to some of the employees, and at the same time raise capital to solve the problem that we are solving in the country and beyond our country. I'm not married to a valuation per se," he emphasised.

Makkar additionally indicated that Cars24 could pursue a public stock-exchange debut even if it was able to mobilize capital through other avenues, citing governance benefits from becoming a listed entity.

"The other thing that comes with an IPO is a stamp on your governance. When you become a listed entity, there is a stamp on your governance. That could be another reason I might go for an IPO in spite of getting money from the primary market.

"Over the last two years I have built that governance internally. If I go truly for an IPO, I get that stamp on my governance and a check additionally. So, for me, that could be the other reason. Despite getting secondary capital from the market, I might still go for an IPO," he highlighted.

Beyond India, Cars24 is looking at further expansion in the Gulf region and Australia.

In the UAE, Makkar stated Cars24 at present has around a 7 per cent share of the used-car market and is growing at nearly 30 per cent, while in Australia it has expanded to three cities.