IEG – Investment Banking Group has acted as the exclusive financial advisor to BlueJack on its sale to Car Trade’s subsidiary, Shriram Automall
The Background The Indian used car market is estimated to reach USD 25 bn by 2023 and register a CAGR of 18%, during the forecast period, 2019-2022, significantly evolving with the growth of the organized and semi-organized sector. The used car market was 1.2x the new cars market in 2018 selling a total of 4 million units. Key growth drivers include revision of the GST rate on used cars from 28% to 12 - 18% and increasing value proposition of the used car as new cars are expected to become expensive due to additional technology costs. Additionally, with companies gradually focusing on reducing the production of diesel cars, demand for compact diesel cars in the used car market is expected to increase.
The Deal BlueJack, a leading C2B used car platform operated by Four Wheels Group Pvt Ltd has been sold to Shriram Automall India Limited, a subsidiary of Car Trade. Car Trade picked up a 51% stake in Shriram Automall in 2018 for USD 22 m from Shriram Transport Finance. IEG – Investment Banking Group has acted as the exclusive financial advisor to BlueJack. Mihir Kapoor, Managing Partner – India, states about the transaction: “The acquisition is aimed to play at the synergies between the two companies, and successfully aids the strategy of expanding across India through a technology-based approach”. Sameer Malhotra, CEO of Shriram Automall, said “We are excited to upgrade our offerings across India with BlueJack. We look forward to learning from them and share our own experience of operating at scale across 150 auction locations spread over 100 tier I, tier II and tier III cities. Together, we believe we can offer the best auction experience for our Indian market with innovative technology.”
The Partners BlueJack is a tech-based platform that has created an application for its users to sell their used cars through an auction bidding process to used car dealers. BlueJack aims to ease the process of selling used cars for its customers by giving them the best price through an asset lite model. Since its inception in 2016, BlueJack has auctioned more than 25,000 vehicles on its platform. It operates in Delhi with dealers from 10 states across the country, including cities like Bangalore and Hyderabad. BlueJack buys cars using its proprietary pricing database and a live auction to sell the vehicles to one of its 5,000 empaneled dealerships. ShriramAutomall pioneers in serving the most organized bidding platforms to facilitate the trade of used vehicles and equipment and serves an exhaustive range of pre-owned commercial vehicles, construction equipment, tractors, buses, cars & SUVs, 3 wheelers and 2 wheelers to create a unique experience for its customers, across India. CarTrade.com is an online auto classifieds platform serving as a marketplace for users interested in buying and selling new and used vehicles.
The Perspective The acquisition of BlueJack is aimed at creating synergies between the two entities through backward and forward integration. Shriram Automall’s supply integration with BlueJack’s seamless tech platform creates an entity that can cater to requirements at both supply and demand end. BlueJack works through an asset lite approach that focuses on delivering it’s services at the doorstep of its customers, in line with the growing trends of a “service at home” culture in India.