US-based Cox Automotive buys stake in Mahindra First Choice

Our Bureau Mumbai | Updated on January 22, 2018 Published on November 24, 2015

HDFC sells entire holding, PE firm Phi Advisors divests partly

US-based digital marketing company Cox Automotive has acquired a significant strategic stake in Mahindra & Mahindra’s (M&M) used-car retailing unit, Mahindra First Choice Wheels Ltd (MFCWL). The financial terms of the transaction were not disclosed.

HDFC, an early investor in the company, has sold its entire stake, while private equity firm Phi Advisors sold a part stake in the Indian company. The transaction was executed through a secondary sale, M&M said in a statement.

“There is an enormous global synergy building in this space. It is not a money-raising exercise. It is about bringing a strategic input,” said M&M Chairman Anand Mahindra.

Cox Automotive owns AutoTrader, the largest digital automotive marketplace in the US, and vehicle research platform Kelley Blue Book. The US-based company, which is a subsidiary of Atlanta-based Cox Enterprises Inc (CEI), has $17 billion in annual revenue.

MFCWL owns online vehicle valuation company

“It is not about an IndianBlueBook versus Kelly Blue Book at some point of time. This is the might of the Kelly Blue Book being thrown behind the IndianBlueBook," he added.

In March, MFCWL had raised ₹94 crore from San Francisco-based hedge fund Valiant Capital in exchange for a 13.36 per cent stake. This had valued the Indian company at about ₹700 crore at that time.

For the financial year 2015, MFCWL had reported a profit of ₹1.92 crore on revenue of ₹44 crore.

“We see deep synergy between the two organisations and aim to leverage their global presence and expertise to take MFCWL to the next level,” Nagendra Palle, CEO and Managing Director, MFCWL said, adding that he expects MFCWL to post ₹70 crore in revenue this year.

MFCWL now has over 650 franchise outlets in 300 towns across India.

“This opportunity allows us to partner with a company that has a reputation for delivering high-quality used car products and services to dealers and consumers in the fast-growing Indian automotive market,” said Joe Luppino, Chief Corporate Development Officer for Cox Automotive.

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Published on November 24, 2015
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