Droom Files DRHP for Rs.3,000 crore IPO
Droom Technologies has filed its draft red herring prospectus (DRHP) with SEBI to raise Rs.3,000 crore via the IPO route. The IPO will comprise of a fresh issue of Rs.2,000 crore and an offer for sale of Rs.1,000 crore. The company is also planning a pre-IPO placement of Rs.400 crore and if successful, it would reduce the IPO amount proportionately.
Interestingly, Droom will be the second online automobile market place after CarTrade Tech to launch an IPO. CarTrade had done an offer for sale in August this year, but its performance has not been too exciting after listing and continues to quote at a 31% discount to the issue price.
Droom also offers an online agnostic auto market place with value added content to help people make car buying and selling decisions scientifically.
The OFS of Rs.1,000 crore will be offered by its parent company Droom Pte Ltd, which is based out of Singapore. The parent may also look to place part of the issue privately considering the unique nature of the industry. The platform offers the purchase and sale of first-hand and second-hand four-wheelers and also two-wheelers.
Droom was founded by Sandeep Agarwal in 2014 and offers a palate of over 250,000 vehicles to buy and sell on its platform. The user base is spread across more than 1000 towns and cities across the length and breadth of India.
Droom offers advantages to users like a huge choice of vehicles, best price based model, agnostic buy and sell platform, choice of used and new vehicles, over 1100 inspection points and easy loan and insurance.
Out of the fresh issue component of Rs.2,000 crore, Droom plans to deploy nearly Rs.1,100 crore for funding its organic growth via expansion of the franchise. Another Rs.400 crore will be used towards inorganic expansion where Droom will look for niche mergers and acquisitions to expand its missing blocks in the most efficient way.
The DRHP approval process normally takes up to 2 months and after that the process of filing RHP will be taken up simultaneously with the IPO execution. The Droom IPO will be lead managed by ICICI Securities, Axis Capital, Edelweiss, HSBC and Nomura. KFIN Technologies (formerly Karvy Computershare) will be the registrars to the IPO.
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