INSUBCONTINENT EXCLUSIVE:
Frontier Car Group, the Berlin-based startup building used car marketplaces targeting high-growth, emerging markets, has picked up another
significant round of funding from a strategic backer also focusing on the same geographical opportunity.Today, OLX, the online classifieds
division Prosus (the digital division of Naspers that listed earlier this year in Europe) announced that it would invest up to $400 million
in Frontier, in a mix of equity, secondary share acquisitions and existing business shares
The deal will include a primary capital injection of an unspecified amount, which OLX has confirmed to me values Frontier Car Group at $700
million, post-money.In terms of business shares: OLX also said that it will be contributing its shares in a JV it had in place with Frontier
The markets that Frontier operates in now include Nigeria, Mexico, Chile, Pakistan, Indonesia and the USA (where it acquired WeBuyAnyCar
last year), in addition to India and Poland.Notably, even before the full $400 million amount is exercised (that is, after the tender
not the majority shareholder), which essentially values the deal at less than $350 million (based on the $700 million valuation).Today,
Frontier Car Group offers buyers and sellers a range of services: in addition to basic inventory listings, there are inspection reports,
financial, pricing guides, warranties and insurance
cars in the past year, triple its value of a year before.As a point of reference, in May of last year, when the company raised $58 million,
it had sold 50,000 cars to date and was on track for $200 million in annualised revenues
Together with OLX and Prosus, we are aiming to revolutionize the used car market in several emerging and developed economies by adding
Martin Scheepbouwer, CEO of OLX Group
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
Frontier: In May 2018, Naspers invested $89 million in the business, an investment that came just weeks after Frontier had raised $58
is also seeing played out in a completely different arena, that of food delivery.The basics of the economy-of-scale principle, as applied to
used car sales, goes something like this: economies of scale makes a platform more useful (there will be more cars on it, and less on
building and running more sales on the same platform improves the margins on the investment that gets made in building and operating that
platform.Targeting P2P used car sales in emerging markets is a big potential business: In part because of the nature of those economies, car
owners are more likely to sweat out assets rather than go for buying completely new vehicles
