Bikebazaar plans fund-raise to expand used two-wheeler sales & service

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© Provided by The Times of India

Mumbai: Bikebazaar, the brand used by the company WheelsEMI for its online two-wheeler financing and trading business, is set to close a series-C funding round soon. The company, which claims to have cracked the two-wheeler financing market, is positioning itself as supporting the two-wheeler lifecycle by financing both new and old vehicles and also facilitating their sale, purchase and servicing.

WheelsEMI , which is founded by three veterans from the two-wheeler industry, currently has the financing business as its mainstay with Bikebazaar the portal as its subsidiary. Last year the company disbursed loans over Rs 326 crore and has assets under management of over Rs 400 crore. Besides lending on its book, the company has co-lending arrangements with Yes Bank and electric two-wheeler manufacturer Greaves.

The company was founded by K Srinivas, former president of Bajaj Auto, V Karunakaran also from Bajaj Auto and Bajaj Finance and Ratheesh Bharatan who was also with Bajaj Finance earlier. It has already raised capital from Elevar Equity and Faering Capital who have invested Rs 230 crore.

Karunakaran told TOI that the company has an asset-light model and operates out of 12-14 branches across the company. Besides this, it has a large presence through a representative in a dealer’s offices. The company has built the capability to extend loans to anyone with the ability and willingness to pay within a 50-80 km radius of their representative.

“We are in the final stages of a fund-raise, we have a verbal offer from one investor and expect to get a term sheet and close it in the next two weeks,” said Karunakaran. He said that the funds would help to bring down the cost of funds in two ways. First by making available funds for lending and second by improving the company’s credit rating above the current BBB level. An ‘A’ rating would sharply bring down the cost of funds for the company.

The pandemic had put pressure on margins as gross non-performing assets (NPAs) doubled to nearly 6%. However, with the second wave receding the gross NPA numbers are also on a decline. However, unlike other lenders, WheelsEMI has been highly successful in recovering through the repossession of vehicles.

“We refurbish these vehicles and sell them through the Bikebazaar portal. Our average loss for the vehicle was around Rs 10,000, which has come down to Rs 4,000 because we can sell the vehicle ourselves instead of dealers,” said Karunakaran.

Given the integration between the verticals, the company expects to have a gross merchandise value of Rs 3,000 crore worth of vehicles by FY25. The used two-wheeler sales are also expected to feed into the third vertical of Bikebazaar service.

According to Karunakaran, for customers, the USP of the portal would be the three Ts – transparency, trust and timeliness. Transparency would be ensured by adopting scientific methods for assessing engine conditions including an analysis of the sound and emission. The company would also ask for fewer documents and take a quick credit decision.

The fourth vertical for the company is electric two-wheelers. “We strongly believe that electric two-wheelers are going to be the future. We want to get into the leasing of swappable batteries, which can cost up to 40% of vehicle cost,” said Karunakaran. He added that the company already had a partnership with Hero Electric, Okinawa and Ampere, which is owned by Greaves.