Mahindra First Choice gets 'Valiant' booster shot

CHENNAI: Seven years after Phi Capital invested into Mahindra First Choice Wheels (MFCW), the multi-brand used vehicle company has tied up another round of investments. San Francisco-based investment advisor firm, Valiant Capital will pick up nearly 15% in MFCW for $15 million (Rs 94 crore). MFCW, currently market leader in the used vehicle segment in India, has been valued at nearly $100 million for this deal.
Sources say the deal comprises primary issue of equity and a small amount of secondary sale of equity. While Mahindra officials refused to confirm details of valuation and stake sale, sources said that the secondary sale of shares will be in "low single digits, approximately 5%" while the primary equity will be around 10%. Phi Capital continues to remain invested in MFCW.
Speaking to TOI, Anand Mahindra, Chairman & Managing Director, Mahindra & Mahindra and also the Chairman of Mahindra First Choice Wheels said: "MFCW is yet another example of innovation and entrepreneurship within the group, where new business models are being explored and implemented with persistence. It is exciting to see marquee investors attracted to MFCW and participating in its growth story where much is yet to come!" The small amount of secondary sale of shares, he added, is intended to signal that Group Mahindra has a federation PE approach to new businesses. "Both Mahindra and other shareholders in MFCW are monetizing. Monetization for us is always the goal and these investments lead towards that goal," he said.
As part of the secondary sale, all the shareholders in MFCW will sell a small amount of stake to Valiant.
"Our existing PE investors worked closely with us in closing this deal and helping bring this new investor on the table," said Rajeev Dubey, president (Group HR, Corporate Services and After-Market) & Member of the Group Executive Board, Mahindra & Mahindra.
The company plans to use the fresh funds infusion to accelerate its growth both of the physical network as well as adoption of its technology enabled products and services. MFCW is planning to end this fiscal year (2015) with 500 franchise outlets and grow to 1,800+ outlets in the next 5 years.
In addition, it plans to use the funds to broaden its reach for its products and services across other used vehicle categories and two-wheelers are the next segment currently under consideration said company officials. In fiscal ending 2015, MFCW used vehicle volumes sold will be 140,000 between its retail and wholesale and it will complete 140,000 Autoinspekt inspections.