TPG backed, premium car retailer Landmark Cars to file for an IPO of Rs 800 crore

Automobile dealership chain Landmark Cars Ltd. plans to file a draft red herring prospectus in the coming weeks to raise over Rs 800 crore through an initial public offering, said people aware of the company’s plan.

Axis Capital and ICICI Securities have been appointed as the lead managers for the proposed issue, they said.

TPG-backed Landmark Cars is India’s biggest seller of premium vehicles of automakers Mercedes Benz, Volkswagen, Honda and Fiat Chrysler. It may be amongst the first automotive dealership companies in India to float an IPO. It is also the first automotive dealership company to receive private equity investment.

Globally, there are multiple large auto retail chains which are listed. India is likely to see a similar trend, say experts.

The IPO will offer TPG a chance to sell a part of its stake in the company, said the people cited earlier. The proceeds from the IPO may be used for expansion, they said.

An email sent to Landmark Cars did not elicit any response till as of press time.

TPG had invested around Rs 140 crore in the automobile dealership chain in FY15. Since it came on board, Landmark Cars’ business has more than doubled—from retailing about 10,000 vehicles through 41 outlets at the end of FY15, sales grew to 20000 to 25000 cars at the end of FY20, giving an annual turnover of Rs 2,500-3,000 crore.

Apart from being the biggest seller of Mercedes Benz, Volkswagen, Honda and Jeep vehicles in the country, it is also the third biggest retailer of Renault cars in India.

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The company operates more than 110 outlets across eight states. It is in the business of sale of new vehicles (passenger as well as commercial), after-sales service, and sales of pre-owned passenger vehicles. It also facilitates sale of third-party financial products, including insurance policies and vehicle finance.

“It is a debt-free company and it believes in having an asset light model to run its operation, which was the key reason why TPG decided to invest in the company,” said one of the persons cited earlier. “Landmark also separated management from ownership. It is considered as one of the most professionally run automotive retail businesses, unlike family-run businesses in India.”

The company recently entered into a partnership with global EV giant BYD to sell its electric vehicles in Mumbai and the NCR, which is seen giving the company the early mover advantage in the emerging electric vehicle space.

With India upgrading to bigger cars and premium SUVs, Landmark’s portfolio of premium brands offers a prospective investor a chance to dip into this pie. In India, the market for premium and luxury cars is expected to grow by 10-15% in the next five to seven years.

Landmark Cars is led by Sanjay Thakker, who started the operations and opened the first dealership for Honda cars in India in 1998.

Another person aware of the company’s plan said, “Besides being an automotive dealer, it has also made forays into auto-technology platforms through investments in Pitstop, a multi-brand car service and repair provider and Sheerdrive, an online platform for used cars. The company also has an omnichannel approach with their e-commerce platform and digital initiatives.”

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Landmark Cars has a sister company, called Policy Boss, which is among the biggest auto insurance broking firms in the country–selling close to 6-7 lakh insurance policies a year.

With a negative compounded annual growth rate in the last five year, the Indian passenger vehicle market is poised for a strong bounce back, driven primarily by increasing need for personal mobility. The rising aspirations of customers, growing disposable income, lowering replacement cycles and increasing financial penetration will further drive the premiumisation story in the country.

There are very few automotive chains that have a presence across eight states and over 100 outlets catering to both new and pre-owned vehicle segments.


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