In a stock exchange filing on Monday, CarTrade said that it will acquire 100% stake in Sobek Auto India Pvt Ltd, the entity which houses OLX India’s automotive business for a cash consideration. Even though it is profitable, the acquisition could significantly impact CarTrade’s cash cushion.
As of March 31, 2023, the company — which had raised funds from investors such as Temasek Holdings and Tiger Global prior to its public offering in 2021 — had Rs 1,185 crore cash and cash equivalents on its books on a standalone basis.
OLX is the classified unit of Dutch-listed investment firm Prosus. Earlier this year, Prosus had said that it was divesting OLX’s automotive business globally on account of weak macroeconomic conditions and rising challenges for the segment. Reportedly, Prosus had earlier engaged in discussions with several other players in the used-car segment, including Cars24 and Spinny, prior to closing the deal with CarTrade.
“The acquisition is in furtherance of the strategic objectives of the company to undertake investments which provide synergistic benefits to the existing businesses of the CarTrade Tech,” the company said in the stock exchange filing.
As per the filing, Sobek Auto reported a turnover of Rs 1,110.4 crore for FY22, up from Rs 592.3 crore in FY21. “As part of the acquisition of Sobek, Sobek has entered into an Intellectual Property License Agreement and a Transitional Support Agreement for the use of certain brands and technology,” it added.
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In its earnings statement released last month, Prosus had said, “Ecommerce consolidated trading losses (or operating losses) from continuing operations of $617 million reflected incremental investment in the group’s ecommerce growth extensions as we continued to invest in high-conviction growth areas. Market conditions deteriorated significantly for this business in the second half of the year and the group is completing an exit of OLX Autos”. Prosus had also said last month that it was looking for buyers for OLX classifieds and it’s used-car listing business. OLX recently shut down operations in some South and Central American countries, while also laying off 800 people.
CarTrade Tech’s shares ended trading 1.7% lower from its previous close at Rs 486.85 at the BSE on Monday. For the year-ended March 31, 2023, CarTrade Tech reported operating revenues of Rs 363.73 crore, and a net profit of Rs 40.43 crore for FY23.