CarTrade tech, based in Mumbai, will acquire OLX India’s auto sales business in an all-cash deal. The acquisition is valued at Rs 537.43 crore.
CarTrade will obtain a 100% stake in Sobek Auto India Private Ltd from OLX India. It will operate OLX India’s auto sales segment after the acquisition. The acquisition details were disclosed in a BSE filing.
Details in the BSE Filling
The filing states that Sobek has entered into an Intellectual Property License Agreement and a Transitional Support Agreement. The agreements allow Sobek to use certain brands and technology as part of the acquisition.
CarTrade Tech stated that the acquisition aligns with its strategic objectives, thereby offering synergistic benefits. In addition, the company aims to undertake investments that effectively enhance its existing businesses. By doing so, the company seeks to maximize the potential for growth and development.
The filing highlights the acquisition as a means to further the company’s strategic goals. Sobek Auto’s increased turnover indicates its growth in the automotive sector.
The company also mentioned in the filing that the transaction is conditional on specific requirements. The completion of the transaction depends on the terms and circumstances stated in the share purchase agreement.
The process may take anywhere between 21 to 30 days or a duration mutually agreed upon by the parties involved. The finalization timeline of the transaction relies on the fulfilment of conditions and agreement terms.
Moreover, CarTrade Tech’s acquisition of Sobek Auto will facilitate the utilization of its intellectual property and technology. Furthermore, the agreements ensure a seamless transition of Sobek’s operations under the ownership of CarTrade Tech.
CarTrade Ventures
CarTrade launched CarTrade Ventures in February to invest up to Rs 750 crore. CarTrade Ventures will invest in auto finance, leasing, insurance, and servicing areas.
With a focus on car ownership, electric vehicles, clean energy, and new-age technologies, the company aims to make strategic investments. It plans to utilize generated profits and available funds for capital investment.
Additionally, the company may acquire ventures alongside its investment activities. Over a span of five to seven years, CarTrade Ventures intends to deploy the capital. Notably, the company’s investment focus encompasses various sectors within the automotive industry.
Founder and Chairman Vinay Sanghi emphasized the company’s commitment to investing in new-age technologies, aiming to digitalize the process of buying, selling, and owning vehicles.
CarTrade Ventures intends to significantly contribute to the auto ecosystem’s growth.
About CarTrade company
CarTrade, founded in 2010, provides a platform for users to own new and used vehicles. In addition, the company offers information related to vehicles and operates popular brands such as CarWale and BikeWale.
Furthermore, the company runs other brands, including Adroit Auto and AutoBiz. Notably, in August 2021, the company successfully listed on the stock exchange. Additionally, it attracts an impressive average of 35 million monthly unique visitors.
The platform allows users to discover comprehensive information about vehicles and facilitates the process of ownership. Moreover, CarTrade is among the platforms considering the acquisition of the troubled startup.
Reports indicate that GoMechanic encountered issues with fudged revenue numbers during fundraising, which potential investor SoftBank discovered during an audit.
Share Prices Rise Significantly after the Acquisition
CarTrade Tech’s share price rose by over 14% in Tuesday’s trade after announcing the acquisition. The company will purchase OLX India’s vehicle sales division for ₹537 crore CarTrade Tech’s shares opened at an intraday low of ₹521.95 apiece on BSE.
Ruchit Jain, Lead Research Analyst at 5paisa, highlighted the recent buying interest in the stock. Additionally, good volumes and price-up moves have been observed, indicating a positive short-term momentum.
Furthermore, immediate support is expected at around ₹480, signalling a potential level of stability. As a result, the stock’s long underperformance seems to have transformed with these recent developments.
About Sobek
Sobek, operating under the Companies Act 2013, runs an online classifieds business and digital automotive platform. Sobek acquired OLX India Private Limited’s online listing business on June 30, 2023.
Sobek Auto reported a turnover of Rs 1,110.4 crore for FY22, reflecting growth from FY21.
However, according to trendlyne data, Sobek’s stock price witnessed a significant decline of 27.6% in the past year. Moreover, the stock underperformed its sector by 33.8% during the same period.
Despite these challenges, the business transfer agreement outlined the terms and conditions for Sobek’s acquisition of OLX India’s online listing business. Furthermore, Sobek’s incorporation under the Companies Act 2013 enables its operations in the online classifieds and automotive sectors.
