Cars 24

Neu Capital acted as sole debt advisor to Cars24 on securing a $100m debt facility with IFM Investors.

Cars24, a direct-to-consumer (D2C) online used car retailer, had recently secured a $450 million investment from a consortium led by Softbank. The company was extending its operations into the UAE, Thailand, and Australia and required a debt facility to release equity and facilitate continued fleet growth.

Headquartered in India, the e-commerce platform specialized in pre-owned cars. With ambitions to expand globally, the company targeted Australia as one of its key markets. Their mission was to streamline the process of purchasing a used vehicle online, making it as convenient as any other online transaction.

Neu Capital proposed a two-phase solution, beginning with the refinancing of existing inventory followed by the establishment of a warehouse facility. The approach involved thorough diligence on several crucial topics - supply chain, demand forecasts, unit economics, financial modelling, asset profile and infrastructure.

Multiple term sheets were solicited from Australian and international non-bank lenders with the first executable term sheets received within four weeks. Neu Capital led the process from credit paper preparation and term sheet negotiation through to financial close.

The outcome exceeded Cars24’s expections on Leverage, Size and Price:

• Leverage: Assets were isolated through a new SPV (Special Purpose Entity) allowing for a high advance rate against vehicles
• Size: The $100m facility provided for substantial fleet expansion with the capacity to scale.
• Price: The competitively run process resulted in an executed option with an all-in funding cost that was approximately 300 basis points lower than that of the underbidder.

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Case Studies