Frontier Car Group, a Berlin start-up that has built a used car marketplace targeted specifically at countries outside of Western Europe and North America, raised $58 million in funding: $41 million in equity and $17 million in debt funding. The funding was led by Balderton Capital and TPG Growth (companies which worked with Frontier previously), alongside Fraser McCombs Capital and Autotech Ventures.
The company wishes to expand their business in Africa, Latin America and Asia; they have sold 50,000 vehicles since launching at the end of 2016 and are on track to do $200 million in annualised revenues per year.
Frontier is not disclosing its valuation, but according to TechCrunch: ‘a source close to the company said the demand to participate in this round was high and led to two unsolicited Series C term sheets — each for around $100 million — and both on a pre-money valuation of over $200 million’.
In May last year, Cars45, raised a $5 million Series A round from the Frontier Cars Group, a holding company whose backers include Balderton Capital, EchoVC, TPG Growth, and NEA.
Interview with Paul Dailey, Partner at Citrin Cooperman
Please tell me about your involvement in the deal?
We were involved from a tax perspective. We advised regarding structuring and potential withholding taxes on dividends.
Was this a good deal for all involved, and why?
Yes, it clearly was. FCG was able to obtain significant financing from the new partner so as to continue its significant growth model. From an economic perspective, it will enable FCG to expand business operations in additional countries. The final agreed upon tax structure was deemed tax efficient for both parties.
What challenges arose? How did you navigate them?
From a tax perspective, a structuring challenge was initially encountered. We worked closely with FCG management and the investor’s management and tax counsel. At the end, it was resolved to the mutual satisfaction of both parties.