Cazoo, an online used car marketplace firm redefines the way people purchase, finance, or lease used cars. For this London unicorn, 2021 was a great year as it reached the milestone of 600% growth in revenue YOY during the pandemic.
$630 million: The transaction!
This trend seems to continue in 2022 as well as the leading car retailer has announced that it has agreed to issue and sell 2.00% convertible senior notes via a private placement in an aggregate principal amount of $630 million. The Notes will be convertible into Cazoo Class A Ordinary Shares at an initial conversion price of $5.00, which represents a 20% premium to the trailing 5-day volume-weighted average price of the Shares.
The transaction is led by new investor Viking Global Investors alongside participation from several existing shareholders including Mubadala Investment Company, D1 Capital and Willoughby Capital and other new and existing investors. Closing of the Transaction is subject to customary conditions.
The financing will supplement the company’s current strong liquidity position and will provide a material multi-year runway for the Company to be able to execute its strategy over the coming years. Taking this capital into consideration, Cazoo will have a pro forma cash balance of $900 million following the transaction.
Alex Chesterman OBE, Founder & CEO of Cazoo said: “This transaction, where we have raised an additional $630 million, further reinforces the strong belief in Cazoo from new and existing shareholders who, like us, are extremely excited about the huge market opportunity that we have ahead of us. We are now very well-funded for the coming years to continue to capitalise on this opportunity and deliver the best car buying and selling experience for consumers across the UK and Europe.”
Expansion plans
This additional capital will support Cazoo’s continued growth in the UK and help it expand in Europe. Already, Cazoo has established a marketing leading platform, brand, team and infrastructure in the UK. To mark its European expansion, the company recently launched in France and Germany and acquired strong businesses and teams in Spain and Italy.
Besides operating in the largest European markets, the company has also expanded its reconditioning capabilities, thereby taking UK reconditioning fully in-house. It has also grown from one site early in 2021 to 11 in-house reconditioning sites with a potential output capacity of nearly 250,000 units per annum.
Acquisitions by Cazoo
In 2021, Cazoo complemented its expansion to new markets with strategic acquisitions. It acquired Swipcar in Spain and brumbrum in Italy to get hold of strong local teams, capabilities, infrastructure and relationships to launch into these markets this year.
Furthermore, the company also enhanced its product proposition with the launch of its fully-integrated subscription service that has gained good traction among customers. Eventually, Cazoo is now the market leader in consumer car subscriptions in Europe with around 10,000 active subscribers. It has increased the number of ancillary products it sells, most recently adding service plans. The launch of its direct from consumer car-buying channel in the UK has been performing ahead of expectations and is expanding sourcing capabilities and diversifying the buying mix in this attractive channel.
What Cazoo plans for 2022?
From the strategic advances of 2021, Cazoo has laid out some of its key objectives for 2022 and beyond. It is believed that the company’s ever-improving market leading proposition alongside a growing level of inventory will result in continued rapid market share gains in the UK. The company is in plans to replicate the success of its UK business across both Germany and France. Cazoo expects to sell over 100,000 cars in 2022 and generate revenues in excess of £2 billion.
Alex Chesterman OBE said: “While we expect to continue to rapidly increase our market share, the market opportunity is so substantial that with just low-single-digit market shares and prudent GPU targets we would have an enormous business generating meaningful free-cash-flows.”
