Based in London Cazoo, an online used car marketplace, said on Thursday it had raised $630 million (about 553 million euros) by selling a stake in the company to a group of investors. The development comes nearly six months after the company listed on the New York Stock Exchange (NYSE).
The company raised capital through a 2% sale via convertible senior notes which will then be converted into Class A common stock at a price of $5. This price represents a 20% premium to the volume weighted average price over the last 5 trading days of the stock.
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Alex Chesterman OBE, Founder and CEO of Cazoo, said: “This transaction, in which we have raised an additional $630 million, further reinforces the strong confidence in Cazoo from new and existing shareholders who, like us , are extremely excited about the huge market opportunity we have in front of us. We are now very well funded for the years to come to continue to capitalize on this opportunity and provide the best car buying and selling experience to people. consumers in the UK and Europe.
The combination of Cazoo’s current funding and existing cash of approximately $260 million as of December 31, 2021 will leave the company with a pro forma cash balance of approximately $900 million.
Investors and use of capital
The investment was led by new investor Viking Global Investors, with participation from several existing shareholders including Mubadala Investment Company, D1 Capital and Willoughby Capital, as well as other new and existing investors.
Cazoo says the additional capital will support its continued growth in the UK and expansion into Europe. The funding will help the company execute its strategy over the next few years.
Alex Chesterman OBE says: “I am extremely proud of what Cazoo has achieved both since launch and particularly over the past 12 months. In 2021, our second full year of operations, we achieved record revenues of over £665m and made significant progress on all aspects of our ambitious strategy. We have built a market-leading proposition that consumers love, a world-class team of over 4,000 people, a household brand that is now recognized by over 75% of the UK population, and significant infrastructure capabilities at UK and EU.
Cazoo is an brainchild of Alex Chesterman. In 2003 he co-founded LoveFilm, which revolutionized the UK DVD rental market. In 2008, he created Zoopla, which brought transparency and efficiency to the proptech market. Zoopla was later acquired by Silver Lake in 2018 in a £2 billion deal.
In the same year, 2018, Cazoo was born. “Used cars are one of the last consumer markets to benefit from a digital transformation,” the entrepreneur said shortly after launching. It aims to become the “Uber” of the “used car market”.
Cazoo says it wants its customers’ car buying experience to be smooth, seamless and convenient, just like buying any other product online.
The company lists thousands of cars in stock at any one time, all centrally stored in the Midlands. They are available either for home delivery anywhere in the UK or for collection from one of Cazoo’s customer centers within 72 hours. Every Cazoo car comes with a full 7 day money back guarantee and a full 90 day warranty.
The growth and recent developments of Cazoo
Over the past two years, the company says it has established a market-leading platform, team, brand and infrastructure in the UK and is looking to expand into the EU, having recently launched in France and Germany and having acquired companies and teams in Italy and Spain.
In 2021, the company launched in France and Germany. The company also acquired Swipcar in Spain and brumbrum in Italy, which provided Cazoo with strong local teams, infrastructure and capabilities. This will help the company accelerate the launch in the important Spanish and Italian markets in 2022.
Over the past 12 months, Cazoo has also expanded its refurbishment capabilities, taking UK refurbishment entirely in-house and growing from just one site this time last year to 11 in-house refurbishment sites. with a potential production capacity of approximately 250,000. units per year.
Additionally, Cazoo has also increased the number of ancillary products it sells, most recently adding service plans, and launched its direct-to-consumer car buying channel in the UK. This channel has exceeded expectations and greatly expands sourcing capabilities and diversifies the purchasing mix.
In 2022, the company expects to sell over 100,000 retail units and generate revenues in excess of £2 billion, representing annual growth of approximately 200%.
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