Online and mobile classifieds firm Quikr set to raise Rs 900 crore
An email sent to Steadview Capital did not elicit a response. Quikr's founder and CEO Pranay Chulet declined to comment.
The transaction is expected to be completed in two weeks. The new two weeks. The new round of financing underlines rising investor frenzy to buy into potential market-leading internet companies. Other heavily funded firms such as Flipkart, Snapdeal, Zomato and Ola are also in talks for new funding. Steadview has invested in Flipkart and Ola last year. Steadview is emerging as one of the most-aggressive hedge funds buying into the India internet story, and is the only new investor shortlisted for Quikr's latest fund-raising.
"There are conversations still going on with 3-4 other investors," said a person directly involved in the transaction.The funding will help Quikr expand aggressively in an increasingly competitive classifieds market, where it is taking on South African internet conglomerate Naspers-backed OLX and heavily funded firms in the real estate and automobile segments.
"Funding may also be used for acquisitions and strategic investments," one of the people familiar with the company's plans said.
Quikr is being advised by investment banks Investec and Avendus Capital on the transaction.
Existing investors, including bulge bracket investment firms Tiger Global Management, private equity major Warburg Pincus and Sweden's Kinnevik, were initially in talks to lead the round, "but the company may ask existing investors to reduce their participation in the round to bring in more new investors," a source said.An email sent to Steadview Capital did not elicit a response. Quikr's founder and CEO Pranay Chulet declined to comment.
Quikr's valuation has increased steadily over the past three years. The company was valued at around $100 million in May 2012 when Warburg Pincus invested in it. Its valuation increased to $240 million in March last year and then to $400 million in September, when it raised funding from Tiger Global.
Earlier known as Kijiji, Quikr was formed as a spinout in 2008 from online marketplace eBay's India operations with initial funding from Matrix Partners India. Since then it has raised $196 million from a slew of investors including Omidyar Network, Norwest Venture Partners, Nokia Growth Partners, Tiger Global Management, Warburg Pincus and Kinnevik. The new round will take its total financing to $350 million across eight rounds of funding.
According to a recent report by Morgan Stanley , the Indian internet market is expected to expand from $11 billion in 2013 to $137 billion by 2020.
While online retailing is expected to expand from $3 billion to $102 billion in this period, the total classifieds and online advertising market is estimated to increase from $800 million now to $7 billion by 2020. With Quikr's likely expansion into new product commerce, it is expected to be at the intersection of both these markets. Quikr will use the round of funding to ramp up its marketing expenditure, besides investing in its mobile platform, which accounts for about 80% of its traffic. The company recently launched a messaging service called Quikr Nxt to bring buyers and sellers together on its online platform.
Another area of focus for Quikr will be to go deeper in large segments such as real estate, automobiles and jobs, said one of the sources mentioned above.Companies in these segments such as CarDekho and CarTrade in auto classifieds, and Housing and Commonfloor in realty have been ramping up their investments after raising large financing.
The competition in the classifieds market is likely to intensify, and unlike e-commerce, it is expected to be a winner-takes-all market.
"Classifieds model is a media enterprise, and unless you have dominant viewership you cannot charge disproportionate fees," said Suvir Sujan, cofounder of Nexus Venture Partners, in an interview in January . Nexus was an investor in OLX before its acquisition by Naspers in 2010. It has also backed Housing. "In India today , the online classifieds players are going neck-toneck on marketing and currently no one has dominance of viewership, so it is hard to monetise the horizontal business," said Sujan.