Online new-car classified site CarExpert’s valuation hits $50m on capital raising

Online classified site CarExpert’s valuation has hit $50m thanks to a capital raising backed by billionaire Laurence Escalante and Seven West Media.

The nation’s largest online classified site for new cars has bolstered its valuation to $50m through a capital raising bankrolled by Perth billionaire Laurence Escalante and Kerry Stokes’s Seven West Media, as it moves to expand into Southeast Asia.

CarExpert has raised $15m from its investors since its launch four years ago after a $3m Series B raising last month, which co-founder Alborz Fallah described as a “bridging round” ahead of a pre-IPO raising next year and a listing on the Australian Securities Exchange in 2025. He said Mr Escalante contributed more than $1m to the round after making his maiden investment in the group in September 2022 via his family office, Lance East Office.

“Laurence now has the largest car collection in Australia. He is a massive car guy, loves tech and loves what we do. He has been an amazing supporter of the business. He helps us a lot,” Mr Fallah said. “He has a lot of expertise in the tech and conversion side of things. Also access to his cars helps too, for the videos we do.”

CarExpert concentrates only on new cars and over the past four years has become Australia’s largest new car marketplace, building its staff to 55 across offices in Brisbane, Sydney and Melbourne.

Australian billionaire and motoring enthusiast Laurence Escalante.

It business model is based on UK’s successful CarWow, which uses content to drive new-car buyer engagement and connects buyers with dealers for an easy transaction. The two businesses have a working relationship.

After the purchase of PriceMyCar in September 2022, CarExpert shifted its focus to becoming a content-led marketplace, which connects new-car buyers with hundreds of participating dealers using quality content. “We have spent the past three years building our business up after the shock of Covid. We are focusing back on digital, which is what we know best. We have the automotive content side of the business, and we also have the marketplace side,” Mr Fallah said.

“We have grown 4½ times in revenue since 2021.”

CarExpert charges the dealer only when a car is sold and delivered, meaning its business objectives are aligned with its dealer partners (of which it now has more than 400 on board) to deliver sales, rather than just leads and an invoice.

“That model has helped us get a big foothold in the industry. We are not sending bills to dealers all the time. But this system also relies on dealer honesty,” Mr Fallah said.

He said CarExpert had achieved its revenue budgets each month so far this year and September represented the first-ever month exceeding $1.1m. Revenue is expected to be around $1.3m in October, giving the firm an annual run rate of more than $15m.

CarExpert also achieved EBITDA break-even in September and is expecting a similar result in October and November.

“To be honest, we weren’t expecting to be profitable by this point but you need to be showing a profit before you list in this market environment,” Mr Fallah said.

“The market has turned around quite a lot for us. The supply-and-demand metric for new cars has changed. There are now lots of cars sitting at dealer lots. That means they have to up their engagement with brands like us.”

ASIC filings reveal CarExpert is backed by the Australian auto arm of Malaysian conglomerate Sime Darby Berhad, which owns auto distributorships throughout Southeast Asia.

Seven West Media chief executive James Warburton with Kerry Stokes. Picture: Nikki Short

SIME Darby Motors Group Australia chief executive Matthew Wiesner sits on the CarExpert board and Luke Elliott, co-founder of Kuala Lumpur-based investment group Catcha Group, has also recently joined the board.

CarExpert is led by Damon Rielly, the former CEO of ASX-listed iCar Asia, which was sold last year by Catcha for more than $US200m.

“We are going to take all our expertise and technology to Malaysia, Indonesia and Thailand next year. We see these Asian markets as not as mature as they can be. So that is a prime opportunity for us,” Mr Fallah said.

The CarExpert board also includes Nikki Warburton, the former chief customer and marketing officer of Audi.

In October 2021 CarExpert completed a $10m capital raising, including a $3m cornerstone investment from Seven West Media, which owns 15 per cent of the company.

As part of the deal, CarExpert launched an advertising suite that consisted of 10 products last year, and continues to expand its reach across Seven West Media digital assets.

Mr Fallah said the firm’s strategy was to extend and distribute its content on to multiple platforms.

In addition to delivering motoring content across Seven West Media (7News, TheWest and Perth Now) and Australian Community Media (which has more than 100 community websites and newspapers, including large sites such as the Canberra Times and the Newcastle Herald), it now extends on to Microsoft Start and Google News, and soon to be on Apple News.

CarExpert was established by Mr Fallah and entrepreneur Paul Maric in 2019 after they sold their CarAdvice.com.au auto content business to Nine Entertainment for $62m in 2018.

Nine has since folded the CarAdvice asset into its Drive automotive classifieds business.

CarExpert commenced its first-ever in-person open day in Melbourne at Docklands earlier this month.

“It was a huge success, with nearly 400 people registering to attend. On the day we showcased new model cars and held a meet-and-greet with the CarExpert editorial team,” Mr Fallah said.

In 2021 CarExpert opened its first experience centre at Warringah Mall on Sydney’s northern beaches, where it brought 40 cars to be viewed and test-driven by prospective buyers.

However, it has now pulled back on its bricks-and-mortar retail strategy.

“It was a great idea and we had a lot of success with it. But Covid really hurt that model so we have decided to focus on digital,” Mr Fallah said.

“It doesn’t mean we won’t go back to it in the future, but now we want to focus on digital.”