Jiji acquires Cars45 for an undisclosed sum
Jiji acquires Cars45 for an undisclosed sum
Classified ads, once hailed as disruptive marketplaces, are giving way to transactional marketplaces. Nonetheless, some classified advertising platforms in the West, such as eBay, have evolved over time, acquiring competition by operating both models.
This is occurring in part in Africa, at least for those classifieds businesses that have not yet died. Jiji, one of Africa's largest classifieds marketplaces, is an example. The company announced today that it has acquired transactional car marketplace Cars45 for an undisclosed sum.
This is significant news for a variety of reasons. But before we get to that, Cars45 has changed hands so frequently over the last three years that some may have lost track of how many times the company has changed hands. Thus, it is critical to address this.
Cars45 raised $5 million in 2017 from Frontier Car Group (FCG), a Berlin-based company focused on the development of used-car marketplaces in emerging markets. As a result, FCG became the largest shareholder and parent company in the Nigerian automobile industry. FCG received $400 million from OLX Group two years later (a division of Prosus, the Netherlands-based separate tech holdings of South African tech giant Naspers). FCG was valued at $700 million in the investment, with OLX Group acquiring a controlling stake. In 2020, OLX Group acquired Cars45 from FCG through its OLX Autos brand.
OLX Autos acquired FCG's Berlin operations in March but retained control of Cars45 and two additional brands: CarFirst in Pakistan and WeBuyAnyCar in the United States. The announcement did state, however, that OLX Autos' new focus would be on Asia and Latin America, implying plans to sell Cars45. With today's news, it appears as though OLX Group has divested itself of the majority of its African businesses, except for South Africa. OLX Group did not immediately respond to a request for comment from TechCrunch.
Having said that, this is not the first time Jiji and OLX have partnered. The Naspers-owned online marketplace sold its Nigerian, Ghanaian, Kenyan, Tanzanian, and Ugandan operations to the seven-year-old classifieds player in 2019. As a result, according to company statistics, Jiji now receives 10 million unique monthly visitors and has three million active listings.
Why this acquisition is significant
In an interview with TechCrunch, co-founder and board member Vladimir Mnogoletniy noted that the second most popular category on Jiji is vehicle listings. He asserts that the category has over $3 billion in listings out of the platform's total listing value of more than $10 billion (real estate accounts for nearly $7 billion). “We hold leadership positions in every market in which we operate and are unquestionably the classifieds market leader in the region. Additionally, we are probably Africa's largest e-commerce company in terms of revenue,” he continued.
As a result of the acquisition, Cars45 will expand its vehicle category. Additionally, cars45 will merge its operations in Nigeria (primary market), Ghana, and Kenya with Jiji in order to strengthen its position in the classifieds market. Additionally, the acquisition of Cars45 will help alleviate some of the trust and safety concerns that have plagued Jiji in the past and provide a unique car buying and selling experience through its transactional marketplace model. Cars45 users, meanwhile, will benefit from Jiji's market dominance in online classifieds.
“We will merge this into one company because this acquisition benefits both parties significantly. It's a very common occurrence for marketplace and transactional business models to coexist in a single project," co-founder and CEO Anton Volyansky said of the platforms' integration. “For example, a seller of a car may choose to sell via a marketplace or an auction model. Thus, the process of selling the car would be seamless.”
Cars45's primary value proposition, according to Jiji CFO David Ojo, is its network of inspection centers where vehicles are inspected against more than 200 parameters. Unlike a classifieds marketplace where checks are insufficient, platforms like Cars45 use transactional models to ensure quality checks and detailed reports on a car's condition with multiple databases.
Since its inception in 2014, Jiji has been experimenting with businesses outside of its traditional classifieds model, which the company claims has been profitable. Volyansky describes it as a bold move and a critical foundation "for building the company's future." However, the future is not without competition. Indeed, it becomes more intricate over time. Currently, Jiji faces regional competition from Swiss-owned ROAM and Jumia Deals, as well as Autochek on a horizontal level. Volyansky believes, however, that the acquisition of Cars45 may be the first of many transactional marketplace acquisitions that will differentiate Jiji from competitors.
“In terms of classifieds, we're looking for acquisition opportunities, but we're already a market leader in Africa, so I believe there's very little room for newcomers. However, we are primarily interested in transactions such as Cars45, in which we leverage our leadership positions in classifieds and acquire extremely complementary business models that expose us to the transactional marketplace. As a result, a primary objective for us will be to acquire complementary business models,” he explained.
“We are proud to have established a trusted buying and selling experience in automobiles,” said Soumobroto Ganguly, Cars45's CEO. Combining online and offline expertise makes sense. Merging with Jiji aims to provide users in Africa with a new type of automotive retail experience. We are confident that we can work together to establish an African champion in the O2O automotive sector. We look forward to working together to ensure that transactions are transparent and convenient for our customers, dealers, and franchisees in all of our current and future markets.”
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