Carousell might IPO in US soon – reportedly in talks with L Catterton for S$2B SPAC merger deal

Singapore-based online classifieds marketplace company has been considering a US listing as early as June 2021.

Today (January 2022), the company is reportedly in “exclusive talks” to go public through a merger with a special purpose acquisition company (SPAC) L Catterton Asia Acquisition Corp, according to people familiar with the matter.

This transaction could value the combined entity at up to US$1.5 billion (S$2 billion).

A SPAC is a blank-cheque, shell company that is set up to raise capital in order to acquire private companies. SPACs have risen in popularity because they greatly reduce the time it takes for a company to get listed on the stock exchange. 

Launched in 2009, L Catterton Asia is the largest Pan-Asian consumer-focused private equity firm that operates within a global firm. Headquartered in Singapore, it has strong regional presence with local offices and teams in Hong Kong, Mumbai, Shanghai, Sydney and Tokyo.

According to the sources, the SPAC is looking at carrying out due diligence on Carousell over the coming weeks.

It plans to reach a merger agreement as early as this quarter. Previously, the US listing is expected to take place by end 2021.

The sources added that there are several considerations to weigh before both parties can finalise the talks, which does not guarantee a deal.

Strong growth with fresh funding, acquisitions

In September last year, Carousell snagged the “unicorn” status as its valuation reached US$1.1 billion after its latest funding round.

It raised US$100 million in a round led by South Korean private equity firm STIC, which gave it a step up from its previous US$900 million valuation made during the fund raise last year.

Launched in 2012, Carousell’s other investors include Telenor Group, Rakuten Ventures, Naver, and Sequoia Capital and Naspers.

Following the funding, Carousell also acquired Ox Street — one of the fastest-growing marketplaces for authentic sneakers and streetwear in Southeast Asia — for an undisclosed sum in October 2021.

This acquisition solidifies Carousell’s strategy to accelerate its recommerce growth in the region as it remains committed to reimagine the classifieds experience to make second-hand the first choice.

Carousell’s potential move to list in the US follows in the footsteps of ride-hailing giant Grab, which has made its debut on US Nasdaq in a US$54 billion deal on December 2.

Grab’s valuation is the largest so far in the SPAC space, and the ride-hailing giant will receive about S$6 billion (US$4.5 billion) in cash proceeds.

Other notable firms that are also eyeing a US listing includes Ninja Van and Carro.

In Singapore, two SPACs — Temasek-backed Vertex Technology Acquisition Corp (VTAC) and Pegasus Asia — will start trading on the Singapore Exchange (SGX) by the end of this month.

Featured Image Credit: Carousell