Cinch could be the latest online used car specialist seeking a multi billion pound valuation as it looks to raise cash from investors, according to reports.
Sky News says the BCA sister business is in talks to raise around £500m of funding from a ‘syndicate of blue-chip institutions’.
However, a source close to Constellation Automotive Group, the parent company of BCA and Cinch, told Car Dealer tonight the rumoured fundraising was more likely to be for the wider parent company.
The source said: ‘Cinch is not raising funds, but Constellation Automotive Group is looking at options to fund the expansion of their European business.’
The news comes as rivals Cazoo are said to be finalising their stock market listing in New York which is expected to be announced as soon as next week.
Cinch, which launched only five months ago, sells its own cars and those bought by dealers on its online platform, delivering them to customer homes.
Director Jason Cranswick told Car Dealer in an interview late last year that it was planning to be an ‘Amazon warehouse’ for car dealers.
Sky quotes sources close to the deal, including bankers and analysts, and says Cinch is hoping for a £5bn valuation.
The broadcaster says Cinch has become the ‘market leader’ in the online used car sales field and has seen ‘exponential growth’.
Car Dealer’s recent Top 100 most stocked used car dealers list certainly showed it had been bolstering its stock with 4,606 cars on its books in February.
This comfortably placed it above rivals Cazoo and Carzam in 12th place, edging ahead of the former for the first time.
Sky reports Cinch sources say the website is on course to achieve ‘30 million unique annual users’ on its website and that sales have risen ‘200 per cent so far’. There are, however, no numbers that explain how many sales this relates to and with little trading history they mean very little.
Cazoo float
Cazoo is hoping for a similar £5bn valuation when it lists as part of merger with a special vehicle designed for tech floats, ‘Ajax I’.
The move could be announced on Monday and is believed to be set to make founder Alex Chesterman – the founder of Zoopla and LoveFilm – ‘a billionaire’ thanks to his 30 per cent holding.
The Daily Mail and General Trust will also cash in on a stock market float of Cazoo as it holds 20 per cent of the shares.
Chesterman is reported to have cashed out £100m in shares in September – a move the company refused to comment on. The Sunday Times said Chesterman sold the shares as part of £180m sale to investors in September.
The valuations of Cazoo have been widely questioned in the motor trade with many asking how firms that are yet to show a profit, and which are now operating in what is a cramped online market as traditional car dealers catch up, can be worth such huge multiples.
Serial automotive investor Bruce Beaton said: ‘Compared to mainstream plcs with audited accounts and balance sheets the valuation is absurd.
‘It goes back to the dot com days where the hype was greater than reality.
‘If the same valuation levers were applied to say Lookers they would be trading at £12bn and Tony Bramall would be a happy investor.’
Cazoo has not commented on the IPO rumours to Car Dealer or to request from Sky today. Cinch has been approached for comment by Car Dealer.
Cazoo timeline
Click on the date to read the full story
Feb 2021 – Cazoo acquires German subscription service Cluno and plots European expansion. As part of the deal it says it will be moving its HQ to Germany.
Feb 2021 – Reports suggest Cazoo founder Alex Chesterman cashed out £100m of shares in the last round of fundraising which was announced in October 2020. Firm refuses to comment.
Feb 2021 – Rumours surface that Cazoo is planning a stock market flotation in New York at a potential valuation of £5bn. The figures baffle industry experts.
Feb 2021 – Cazoo snaps up Smart Fleet Solutions, a vehicle reconditioning and storage specialist which operates from four sites and has 500 staff.
Dec 2020 – Cazoo buys car subscription service Drover for an undisclosed sum with a plan to offer subscriptions to the used cars on its platform.
Nov 2020 – Founder Alex Chesterman takes a swipe at car dealers saying the current sales model is ‘flawed at every level’ in an interview with The Times.
Oct 2020 – Cazoo posts £19m loss for first year of business according to accounts filed at Companies House.
Oct 2020 – Cazoo announces a further £240m in funding taking the total raised to £450m at a valuation of £2bn for the online retailer.
Sept 2020 – Cazoo accused of online-only u-turn as it begins turning former Imperial sites into ‘Customer Centres’ and plans many more around the country.
July 2020 – Car Dealer breaks the story Cazoo is about to buy Imperial Car Supermarkets. A day after our story breaks, the firm reveals the deal has been done.
June 2020 – Cazoo signs deal to become shirt sponsors of Everton in a deal rumoured to be worth nearly £10m. It soon follows it up with a similar deal with Aston Villa.
March 2020 – Cazoo announces another £100m in funding taking the total raised to £180m. DMG Ventures, the venture capital arm of the Daily Mail, piles in as part of fundraising.
February 2020 – Leaked Cazoo investor pack reveals used car dealer plans to sell 217,000 used cars a year by 2025. Predicts it will lose £70m in first three years.
December 2019 – Cazoo launches and announces a total of £80m in funding from venture capitalists General Catalyst and Mubadala Capital.
