British online used-car dealer Cazoo has announced it will list on the New York Stock Exchange in an upcoming IPO, with the company valued at $7bn.
The company, which was founded in 2018, will do so through a $900m deal with Special Purpose Acquisition Company (SPAC) AJAX I.
Cazoo is part of a growing number of European companies using SPAC mergers to IPO. It’s a route increasingly used by American companies — 2020 saw $80bn raised in SPACs, surpassing the record $13.6bn in 2019.
Last week, British electric vehicle startup Arrival completed an IPO through a SPAC merger.
Cazoo’s SPAC deal will give the company an extra $1.6bn in new financing, with $805m in cash from AJAX I and an $800m private investment in public equity (PIPE) led by D1 Capital Partners and existing Cazoo investors.
Cazoo’s founder, Alex Chesterman — a serial entrepreneur who also founded property site Zoopla — owns roughly 25% of the business, which is now worth an estimated £1.3bn after the SPAC merger.
Cazoo has grown at a rapid rate. It secured unicorn status in June last year, making it (at the time) the fastest-ever British unicorn, reaching its billion dollar valuation in record-breaking time.
“The used car market is the single largest retail market in the UK — bigger than food in value, at over £50bn per year,” Chesterman told Sifted in June. The company’s now forecasting 2021 revenues to reach $1bn.
Cazoo says it’s now delivered over 20k cars to customers in the UK and a host of recent acquisitions have seen the company expand into Europe too.
The company’s taken on four other car businesses: Drover, Smart Fleet Solutions, Cluno and Imperial Car Markets.
Chesterman had said its decision to acquire car rental service Drover, for example, was because Drover, based in France, gave the company a natural place to start in Europe, as well as helping the company pivot into rental services.
The move means Cazoo now has 6k rental subscribers across the UK, Germany and France.
