As smartphone use spreads rapidly, the business of buying or selling a used car is migrating online across the world, which means insurers need to partner alongside companies that are forging ahead, rather than use face-to-face insurance agents or old fashioned paper-based brokers.
OLX Group, Prosus’ classifieds business, today announced that it’s about to increase its ownership in the online marketplace Frontier Car Group (FCG) and to become the company’s largest shareholder.
Founded in 2016 and headquartered in Berlin, FCG’s instant cash services, combined with OLX’s proprietary classifieds technology and reach, have transformed the online car marketplace, making buying and selling used cars more convenient and efficient for individual car sellers, buyers and dealers.
OLX Group will invest up to €362 million, comprising a primary injection of capital in FCG and the contribution of OLX’s joint-venture shares in India and Poland, as well as the acquisition of shares held by other investors, founders and management, subject to a tender offer process. Regardless of the uptake by investors in the tender process, the transaction will result in OLX Group becoming the largest shareholder in FCG. The deal will strengthen the already successful partnership between the two companies and help to accelerate FCG’s ranking to one of the top five car marketplaces worldwide.
Frontier Car Group (FCG) is an automotive marketplace group which develops, launches, and operates online and offline used-car marketplaces within high-growth market economies, with operations in over 10 countries and 5 continents. In these marketplaces, FCG enables buyers and sellers of cars to transact in trustworthy and transparent ways through technology, infrastructure, access to capital, and innovative business models compared to otherwise complex systems.
FCG is led by 26-year old co-founder and CEO Sujay Tyle, who was previously COO of Hired.com; former Millicom investment director Peter Lindholm; former Auto1 Engineering Director, Andre Kussmann; former Avito COO, Eyass Shakrah; former Auto1 Finance Lead, Peter Malmqvist; and former Celmedia and Azumi Co-founder, Ricardo Donoso. FCG has already raised more than €136 million in funding since its inception just three years ago from OLX, TPG Growth, and Balderton Capital.
Through FCG, car dealers have access to a wider range of inventory, proprietary inspection reports, floor-plan financing, pricing guides and other innovative services; while sellers are offered a suite of new services such as “guaranteed buy”, inspection, financing and a large number of ancillary offerings, such as warranties and insurance. OLX offers dealers and sellers a convenient, reputable, and widely known listing service to buy and sell used cars around the globe.
Fully integrating the two companies will allow for faster expansion while improving and increasing the services available to buyers and sellers, setting a new industry benchmark for the used car trade. Dealers will benefit from improved intelligence via a Dealership Management System, an enhanced re-sale capability via OLX, and provenance and pricing data via CarFax and Blue Book-style products. Sellers will also gain a new range of ways to sell their used cars in a trusted and transparent manner.
OLX, one of the fastest-growing global classifieds groups, first invested about €80 million in FCG in 2018, providing capital for the Berlin-based startup to enhance its services and expand to new geographies, including the acquisition of WeBuyAnyCar in the United States. Both companies currently work together in Latin America, Asia, and Poland, where, collectively, nearly 30 million used cars are sold annually – more than double that of China.
Martin Scheepbouwer, CEO of OLX Group, stated: “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.”
Sujay Tyle, the 26-year-old co-founder and CEO of Frontier Car Group, commented: “FCG has nearly tripled performance across every key metric since the first OLX Group investment less than 18 months ago and has expanded to four new countries in that time. This is a testament to FCG’s team, the ripe market opportunity, and the results of early integration with OLX in our key markets. Together with OLX 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”.