Mahindra First Choice Wheels raises Rs94 crore

Mahindra First Choice Wheels Ltd, a Mahindra & Mahindra (M&M) group company, has raised Rs 94 crore ($15 million) from San Francisco-based investment advisory firm Valiant Capital in exchange for a minority stake.

This is the second round of private equity (PE) raised by Mahindra First Choice, with the first one in 2008 from Delhi-based Phi Capital, who continues to be an investor in the multi-brand certified used car company.

Mahindra First Choice has a network of about 500 franchise outlets across 240 towns in the country.

''Mahindra First Choice 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 Mahindra First Choice and participating in its growth story where much is yet to come," said Anand Mahindra, chairman and managing director, M&M and chairman of Mahindra First Choice

Mahindra First Choice has a ''hybrid'' model encompassing both online and physical presence.

''We believe the 'brick + click' ecosystem is very powerful in the used car business and over the years we have seen our consumers and dealers appreciate this value proposition. We will continue to invest in the overall growth of the hybrid model in the years to come," said Rajeev Dubey, president (group HR, corporate services and after-market) and member of the group executive board, M&M.

The company plans to use the funds to accelerate its growth both of the physical network as well as adoption of technology.

Mahindra First Choice is planning to end this fiscal year (2015) with 500 franchise outlets and grow to more than 1,800 outlets in the next five years. In addition, it plans to use the funds to broaden its reach for its products and services across other used vehicle categories.

The used car market, with an estimated size of 3.2 million units, is already larger than the new car market and is growing faster than the new car market. The current slowdown notwithstanding, it is expected that the used car market will become almost double the size of the new car market in the next five years.

The San Francisco-headquartered Valiant Capital Management, currently manages over $2.5 billion of assets.

The fund's private investments include Facebook, DropBox, Pinterest, Uber, and Evernote in the US, and Yatra Online, Shriram Housing Finance, FreeCharge and First Cry in India.