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Malaysia’s Carsome Turns Unicorn in Deal to Buy ICar Stake

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(Bloomberg) -- Southeast Asian used car marketplace Carsome Group has become Malaysia’s first technology unicorn as part of a share-swap deal that will see the startup take a stake in iCar Asia Ltd.

Carsome agreed to acquire 19.9% of Australia-listed automotive portal iCar from Catcha Group, the largest shareholder of ICar with a 30% stake. In return, Catcha will become a shareholder of six-year-old Carsome, boosting the startup’s valuation to more than $1 billion. Following the share swap, Carsome will offer to buy the remaining 80.1% in iCar from existing shareholders, a transaction valued at more than $200 million, according to a statement from the company on Tuesday.

Under a conditional, non-binding indicative proposal, Carsome would acquire all of the ordinary shares of iCar that it and its associates do not already own for 55 Australian cents (41 U.S. cents) cash per share. The offer represents a 83.3% premium to iCar’s Friday close of 30 Australian cents. iCar’s stock jumped 40% to 42 Australian cents in Tuesday trading.

“This is the first step toward consolidation to form the largest digital automotive group in Southeast Asia,” Carsome Chief Executive Officer Eric Cheng said in a virtual interview. “We visualize a platform that could deliver end-to-end solutions for anyone -- from searching a car to buying and selling, finance, insurance and after-sale services.”

Cheng is responding in part to intensifying competition in Southeast Asia’s online car market, which he estimates to be worth $55 billion. Last month, arch-rival Carro raised $360 million led by SoftBank Vision Fund II, a funding round that pushed its valuation to more than $1 billion. Southeast Asian classifieds startup Carousell said earlier this year it’ll invest aggressively to grow its car-trading business in the region.

The proposed acquisition would bring together iCar’s car listing sites and Carsome’s second-hand transaction platform across Indonesia, Malaysia, Singapore and Thailand. It would also make Carsome one of the most valuable marketplaces for second-hand cars in Southeast Asia.

“Nine million people visit the iCar portal a month to search for a car, and it would be powerful to have many of them trading in and buying cars digitally via the Carsome platform,” said Patrick Grove, CEO of Catcha Group. “The combined company has a long way to go.”

Carsome’s proposed offer is subject to shareholder approval and the process could take two to four months, according to Grove. iCar has appointed Goldman Sachs Group Inc. as its financial adviser and Herbert Smith Freehills LLP as its legal adviser, according to iCar’s stock-exchange filing Tuesday.

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