Berlin-based startup, Frontier Car Group (FCG) has secured $400 million investment from OLX Group. The capital infusion is expected to accelerate the growth of FCG into the top five car marketplaces worldwide and make it number one in some African markets. Its subsidiary, Cars45 is currently operating in a nascent market in Nigeria.
Nairametrics was informed that the $400 million would be disbursed into the expansion of FCG’s footprint among emerging markets. This isn’t connected to the operation of Cars45 – which also raised $5 million in 2017 and will seek more investment as the quest for growth increases, according to Cars45 founder and CEO, Etop Ikpe in an interview with Nairametrics.
This isn’t OLX’s first FCG investment: The $400 million fund isn’t the first capital FCG will be receiving from OLX Group. The startup had received $89 million from OLX Group in 2018. This helped in the acquisition of WeBuyAnyCar in the United States.
What this means: The $400 million capital makes OLX Group the largest shareholder in FCG as it is an exchange for new shares and to buy out existing shareholders in FCG.
It also boosts the value of FCG which reported impressive revenue placed at $700 million in 12 months. Since OLX took up stake in FCG, the used-cars marketplace venture has increased its presence from four to ten markets including Nigeria, United States, Argentina, Poland, India, Chile, Pakistan, Indonesia, Colombia and Mexico.
A partnership that works: While speaking about the impact of OLX Group on the operation of FCG, the co-founder and CEO of the group, Sujay Tyle said since OLX began to invest in the startup, the growth of FCG has been on an upward swing
“Together with OLX Group 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.”
He added that, “This is a testament to FCG’s team, the ripe market opportunity, and the results of early integration with OLX in our key markets.”
Also speaking about the deal, 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.”
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What you need to know: OLX Group is part of classified units of Prosus, the European company owned by South African firm, Naspers.