Droom files for ₹3,000 crore IPO ⁠— the online car dealer wants ₹400 crore for acquisitions

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Droom files for ₹3,000 crore IPO ⁠— the online car dealer wants ₹400 crore for acquisitions
BI India/ Droom
  • Droom plans to raise ₹2,000 crore in fresh issue and the remaining ₹1,000 crore would be raised as an offer for sale.
  • It will use the capital to fund its organic as well as inorganic growth initiatives.
  • Droom was launched in 2014 by Sandeep Aggarwal, who previously founded India’s fourth unicorn ShopClues.
Online automobile marketplace Droom has filed its draft red herring prospectus (DRHP) for its ₹3,000 crore initial public offering (IPO). The Gurugram-based startup — which was valued at $1.2 billion three months ago — is backed by Toyota Tsusho, Digital Garage, Lightbox, Ellison Investments, SevenTrainVentures and others.

Droom plans to raise ₹ 2,000 crore in fresh issue and the remaining ₹1,000 crore would be raised as an offer for sale. The seven-year-old startup has not yet revealed which investors will be selling their shareholdings in the upcoming IPO.
Droom files for ₹3,000 crore IPO ⁠— the online car dealer wants ₹400 crore for acquisitions
BI India

Droom is the second automobile marketplace to hit the public market. Meanwhile, Cars24 — the highest valued player in the domain — has converted itself into a public limited company, a step taken by companies before going public.

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Droom ⁠— launched in 2014 by Sandeep Aggarwal, who previously founded India’s fourth unicorn ShopClues ⁠— has raised $333 million to date, as per business intelligence platform Crunchbase. A unicorn, in startup purlance, is a company valued over a billion dollars.

CarTrade got listed on August 20 and it’s shares have fallen 17% since last one month

Droom will use the proceeds from the IPO for its organic as well as inorganic growth initiatives, which usually includes acquisitions and investments in other businesses.

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UsageAmount
Funding organic growth initiatives₹1,150 crore
Funding inorganic growth initiatives₹400 crore
General corporate purpose N/A

The company in July 2021 highlighted that it is exploring listing opportunities in both India and the US, even though it does not have any business in the United States.

The success of the IPOs from Zomato, Nykaa and EaseMyTrip may have pushed Droom to go for the IPO in India itself, even though raising money in dollars would have left more funds, in rupee terms, to be spent in India.

“I never thought, and I was a Wall Street analyst, that new age companies with no near-term visibility to profitability can be listed on BSE and NSE [National Stock Exchange], and can create a decent enough valuation,” Agarwal told Business Insider in an interview in July 2021.
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He further added that the stock appetite among the Indian investors has changed over the last couple of years and this is why they are open to listing in India now.

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