OLX Group, Prosus’ Netherlands-based classifieds business, will invest $400 million in global car marketplace Frontier Car Group (FCG), with the plan to integrate the Berlin-based startup with the OLX corporation. The goal is to lead the online market for second-hand cars and transform customer experience in the used car industry.
The deal has OLX investing $400 million, comprised of a primary injection of capital in FCG and the contribution of OLX’s joint-venture shares in India and Poland, plus buying shares held by other investors, founders and management, subject to a tender offer process. Regardless of the uptake by investors in the tender process, the transaction will result in OLX Group becoming the largest shareholder in FCG.
FCG, founded in 2016 and led by 26-year-old Sujay Tyle, is one of the top five best-funded automotive tech businesses in the world, closing a hefty Series B last year. The company provides a used car marketplace for emerging economies. On FCG’s platform, both sellers and dealers have an easier time navigating the market and the transaction itself. Sellers are offered a suite of new services such as “guaranteed buy,” inspection, financing and many post-sale offerings, such as warranties and insurance. Dealers have access to a wider range of inventory, proprietary inspection reports, floor-plan financing, pricing guides and other services.
OLX offers sellers and dealers a well-known, respected, and global listing service to buy and sell used cars, but the service stops with classified ads. Therefore the corporation will integrate FCG’s technology and marketplace to dramatically increase the services available to users and expand faster.
Tyle, the 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 used car market in several emerging and developed economies by adding trust, transparency and a comprehensive suite of services to all participants in the ecosystem”.
Martin Scheepbouwer, CEO of OLX Group, said: “Together with FCG, we are aiming to build the leading global used car marketplace, offering a premium and convenient service to millions of car buyers, sellers and dealers. We’re in a unique position to accelerate the expansion of this platform worldwide. Our experience in India is a great proof of concept, where within the space of a year, our joint venture has already increased the number of stores threefold, with car purchase volumes continuing to grow by 10% month-on-month.”