Cab operator Carzonrent India Pvt Ltd is in talks with private equity firms to raise around $20-25 million (Rs 135-167 crore) by selling a stake in its self-drive car rental arm Myles, its CEO and managing director Rajiv Vij said.
The company, backed by private equity firm WestBridge Capital, aims to close the deal within two-three months.
It has appointed financial advisory firm EY (formerly Ernst & Young) to help form the new company, Vij said, adding that a new management team has also been set up for Myles with a mandate to operate to venture and achieve set targets.
Carzonrent plans to first spin off Myles into a separate company and then sell a stake. It will, however, retain a controlling stake in the unit. Vij and his family hold a two-third stake in Carzonrent.
The Business Standard was the first to report the development.
The company plans to use the capital through the stake sale to upgrade technology, acquire customers and expand its franchise network.
Apart from Myles, other companies that provide self-drive services include Avis, Zoomcar and RevvIndia.
New Delhi-based Carzonrent started as a corporate leasing and cab rental service provider in 2000 by Rajiv Vij. It has a car rental service under the same brand and cab service under EasyCabs. Myles operates a fleet of 1,000 cars, of which 800 are owned by Carzonrent and the remaining are franchised.
Carzonrent operates a total of 10,000 cars across the three verticals. While 70 per cent of business is generated by the corporate sector, EasyCabs mostly caters to non-corporate clients. The company expects its self-drive car business to 50,000 cars and clock a revenue of Rs 3,500-4,000 crore by 2020.
Carzonrent is backed by WestBridge, BTS Advisors and SIDBI Venture Capital. The company had first received Rs 6 crore in 2005 from SIDBI Venture in return for a 10 per cent stake. In 2006, Sequoia Capital invested $6 million into Carzonrent for a little less than 20 per cent stake. In 2011, WestBridge demerged from Sequoia and the investment is now managed by WestBridge Capital Partners LLC.
SME Growth Fund, a fund managed by SIDBI Venture, invested another $2.2 million (then RS 10 crore) in Carzonrent in 2010 for an undisclosed stake. Later in 2011, Carzonrent raised Rs 36 crore from private equity fund BTS India.
Last year, Carzonrent had acquired Bangalore-based 42 Solutions Pvt Ltd, which runs ride-sharing app RidingO, for an undisclosed amount.