HDFC Bank picks up minority stake in CarDekho

MUMBAI: HDFC Bank, India's second largest private bank by assets, is picking up a minority stake in auto classifieds portal CarDekho to bolster its digital presence, people familiar with the matter told TOI. This is the first instance of a large lender investing in the country's fast-growing internet economy which has attracted billions of dollars in risk capital over the past year. Sources close to the development said HDFC Bank is evaluating more such strategic investments in the digital space as, increasingly, its customers move to the online platform.

Backed by Ratan Tata, CarDekho was valued at $300 million, or Rs 1,800 crore, in its latest financing round led by China's Hillhouse Capital, Tybourne Capital and its existing investor venture fund Sequoia Capital. HDFC Bank is learnt to have picked up a 1% stake in the Jaipur-based portal. However, the deal does not offer any exclusivity to the bank on the business side, sources said.

When contacted by TOI, spokespersons for both HDFC Bank and CarDekho offered no comments on the development. CarDekho would gain from HDFC Bank's significant reach among car dealers. The bank is looking to expand its share on the digital channel of the overall car loans disbursed, which is where this strategic investment is likely to help.

GirnarSoft, whichowns and operates CarDekh.com, BikeDekho.com and PriceDekho.com, will start facilitating auto financing on its portal soon, said sources. "CarDekho wants to facilitate $1 billion (more than Rs 6,300 crore) in auto loan disbursements over the next four years. The plan is to monetize the platform by capturing the huge auto financing market, both for new and used cars," a person familiar with the development said.

The total car loan market in India is estimated at Rs 80,000 crore with HDFC Bank cornering 33-35% share. While 70-80% of new cars are financed through loans in the country, the used car market only sees 10% financing, which offers a huge potential.