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Axel Springer, India Today to take over CarWale.com

Axel Springer, India Today to take over CarWale.com
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First Published: Thu, Nov 11 2010. 12 17 AM IST
Updated: Thu, Nov 11 2010. 12 17 AM IST
Mumbai: Multimedia company Axel Springer AG and the India Today Group will take over automobile website CarWale.com, part of a wave of global investment pouring into the country’s digital properties.
The $3.6 billion (Rs 16,000 crore) Axel Springer will pick up a 52.1% stake and the India Today Group, its local joint venture partner, will get an 18.3% holding, according to a person familiar with the development.
The stake in CarWale.com, founded by Mumbai-based Mohit Dubey, is being sold by venture capital firm Sierra Ventures and early-stage venture fund Seedfund, both of which will exit fully for a total of about Rs 100 crore, the person added. Mint could not independently ascertain the value of the transaction.
Axel Springer owns newspapers and magazines, including Auto Bild, an automotive magazine with sales of at least seven million copies a month. The India Today Group has been publishing its local edition since 2008 through the joint venture with Axel. India Today runs shopping site Bag It Today, in which Axel has a 19.1% stake, according to trade website Medianama.
CarWale, founded in 2005 with investments from Seedfund—backed by Google Inc., Motorola Inc., Reliance-Anil Dhirubhai Ambani Group and others—has over 1.3 million visitors and 17 million page views each month, and says it leads the car research and used-car classified ad market in India.
Mahesh Murthy, managing partner at Seedfund, said this was one of the biggest deals in the digital space since eBay’s acquisition of Bazee.com in 2004.
“With a growth rate of over 20% year-on-year, India is projected to become one of the top three online markets in the world by 2013. We already have 100 million Internet users,” he said.
CarWale was the first company Seedfund mentored and invested in four years ago.
“India already has more Internet users than Germany, and with a booming auto industry, our investment in CarWale couldn’t have come at a better time,” said Ralph Buechi, president of Axel Springer International.
Ashish Bagga, chief executive of the India Today Group, could not be reached for comment and did not respond to phone calls or email.
CarWale’s Dubey said none of the recent investments in consumer-oriented digital firms this year matched the scale of the deal.
“Axel Springer has been 50 years in publishing and has more than 80 online offerings. India Today also has a huge reputation in terms of media properties. With the investment that would flow from these groups, CarWale will innovate and bring in maximum value for consumers,” he added.
Indian websites have been busy raising money thanks to their newly found popularity with investors. In August, MakeMyTrip Ltd, an India-based online travel company, raised $70 million through an initial public offering in the US.
Komli Media, a digital media network, recently raised $6 million in additional funding from existing investors Nexus Venture Partners, Helion Venture Partners and Draper Fisher Jurvetson.
Prashant Mehta, chief operating officer at Komli, said there was a macro-level shift since 2008-09, when the downturn had hit funding for digital entrepreneurs. “The confidence in digital firms is rising. A good example is a company called Exclusively.in, which raised money from Helion, which has also invested in Komli,” he said.
Digital firms dealing in e-commerce and firms that buy digital media in bulk are experiencing growth, Mehta added.
Prasanth Mohanachandran, founder of AgencyDigi, a digital advertising firm, said there has been a rise in online firms seeking funding. Recently concluded successful deals include firms such as Netmagic Solutions Pvt. Ltd, an IT services provider which raised Rs 70 crore in its third round of funding, from Nokia Growth Partners and Cisco Systems Inc., along with existing investors.
Mohanachandran said that though CarWale was among the largest websites in the auto space, the scope for revenue generation was limited. “This model has some way to go. While CarWale gives comparative details on cars online, it lacks an offline presence. But since it is selling stake and bringing in money, it is doing so for a reason,” he said.
Mint had earlier reported six major venture capital deals worth $40.25 million related to online advertising and marketing firms this year. Chennai-based research company Venture Intelligence said the deals concluded this year include a $7.5 million investment in PubMatic India Pvt. Ltd, an online ad optimization firm, by Helion, Nexus and Draper Fisher Jurvetson. Matrix Partners India, Norwest Venture Partners and Omidyar Network invested $6 million in Quikr India, a Web-based classifieds platform. Shopping site Flipkart.com also recently raised up to $10 million in funding from Tiger Global Management, a New York-based investment company.
anushree.c@livemint.com
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First Published: Thu, Nov 11 2010. 12 17 AM IST
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