Malaysia's Carsome to buy iCar Asia in US$200mil deal that will create largest used car digital automotive marketplace in SEA
By Karamjit Singh July 13, 2021
- Carsome claims deal cements its position as first unicorn in Malaysia
- Combined data from acquisition will allow it to offer better quality service
Building momentum towards an expected SPAC listing in the US, Malaysian based Southeast Asian integrated used car e-commerce platform, Carsome Group has entered into an agreement to acquire 19.9% of ASX-listed iCar Asia Ltd from Malaysian headquartered Catcha Group in a share deal which will result in Catcha Group becoming a shareholder in Carsome.
At the same time, Carsome Group and Catcha Group have also made a joint proposal to the independent directors of iCar Asia to acquire the balance of 80.1% of iCar from its shareholders at A$0.55 (RM.73) per share. The total transaction value is estimated at over US$200 million (RM838 million).
Carsome is making the claim that the deal cements its position as the first tech unicorn in Malaysia, and as Southeast Asia’s most valuable and largest digital automotive marketplace. This deal, along with its impending SPAC listing sets up a battle royale, at least in the used car marketplace, with Softbank backed Carro which raised a US$360 million C round last month. Unlike Carsome which only competes in the used car market, Carro also deals in new cars. However it won’t be a surprise if Carsome eventually gets into the same market as well.
Both Carsome Group and iCar are in the Malaysian, Thailand, Indonesian and Singapore markets, with Carsome a leader in the online used car buying and selling market while iCar Asia is a listings automotive platform.
Eric Cheng (pic), founder and CEO of Carsome will lead the Carsome Group as CEO, and welcomes Catcha Group cofounder and CEO Patrick Grove support to drive the future growth of the business.
“We are excited to have Patrick join us as he brings along two decades of tech entrepreneurship and capital market expertise. This transaction is an important part of our growth strategy to build the entire automotive ecosystem in Southeast Asia and part of how we are transforming the industry through trust, transparency and technology,” said Cheng. “This is the first step toward consolidation to form the largest digital automotive group in terms of revenue, user base, largest live listing, and the best end-to-end fulfilment capability in the region.”
“Bringing iCar Asia’s traffic and dealer network in the region together with Carsome’s leadership position in automotive e-commerce is extremely powerful. We are excited to join Carsome as shareholders and work with Eric and his team to expand our leadership position,” added Patrick. Note that Patrick has a Special Purpose Acquisition Company (SPCA) listing in the US and is looking for a suitable startup to acquire and inject into it.
Carsome said the proposed merger with iCar targets US$1 billion in revenue for 2021, targeting around 100,000 cars transactions annually. The proposed acquisition of iCar will results in Carsome having over 460,000 vehicle listings, over 13,000 car dealers on its network, with more than 10 million monthly unique visitors which adds up to having the largest automotive data set in Southeast Asia.
In comments given to the Australian publication, Financial Review, Patrick (pic) described iCar as akin to a shopping centre where prospective buyers look at cars but then have to go to a dealer to make their purchase. “Carsome is like that anchor tenant who has all the tools to sell the cars, so this partnership gives us the full purchasing chain.”
A press release issued by Carsome highlights the combined offering of an integrated automotive ecosystem in a region that trades over US$55 billion (RM230.4 billion) worth of automobiles annually, according to a report by Singapore based venture builder Momentum Works in its Southeast Asia used cars report 2020. The ecosystem includes dealers to source, advertise and sell cars and, for consumers to research, sell and buy cars.
In the same Financial Review article, Cheng highlights the opportunity the iCar acquisition, through the combined data it can access and analyse, allows Carsome to bring some transparency and higher quality to the fragmented Southeast Asian used car market.
“We’re not just tackling the transactional experience, but we are shaping one of the largest automotive data sets in the region,” he said, adding that they can help customers understand the market price for the car model they are interested in as well as helping Carsome to even predict future prices down to individual city levels.
The deal unlocks the Carsome Group to provide even greater solutions and experience across the buying and selling value chain. The proposed acquisition of iCar Asia offers an enhanced suite of digital products and services to more dealers and consumers in all key markets. Consumers will enjoy a seamless, one-stop solution as Carsome Group expands its offerings to span the whole car ownership journey - from search, transaction, finance and insurance to after-sales services.