Vehicle rental startups Drivezy, Zoomcar in talks for merger

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Drivezy and Zoomcar, both vehicle rental startups are in talks for a merger, reported Livemint. While, Drivezy is a car and bike rental startup, Zoomcar is a self-drive car rental company.

However, the talks between the companies are still in the exploratory phase and may not result in a deal unless both sets of lenders come to terms, according to a report in Livemint.

Well, if the deal succeeds, then top investors in both startups are likely to hold stakes in the merger.

“Zoomcar might look at a share-swap deal, which will allow the company to pay existing shareholders using equity shares, rather than paying the sum entirely in cash,” an anonymous source said.

Drivezy was founded in April 2015 by Ashwarya Pratap Singh, Hemant Sah, Vasant Vermaand Amit Sahu. The company went by the name Justride and served as an aggregator in the carsharing space. However, the company underwent a rebranding and shifted focus to the marketplace model.

The platform also offers rentals for cars and two-wheelers to customers, while car owners can list their vehicles on Drivezy’s platform for customers to select for rentals.

On the other hand, Zoomcar was founded by Greg Moran and David Back in 2013 in Bengaluru. It offers self-driving rentals as well as car subscription.

The company is currently backed by Mahindra and Mahindra Ltd (M&M).

One of the conditions for the merger is that the new ownership structure should be comfortable to all the debt lenders, adding that all the assets and liabilities will be put on the table. The merger will only be approved if there is enough money to cover debt and its repayments.

Besides ,Zoomcar’s losses increased by 10.2 per cent in the year ended March 2018 as compared to FY17.

And, the company’s expenses rose to $39.22 million in FY18, from $32.20 million in FY17. Meanwhile, annual revenue rose to $22.47 million from $17.17 million in the previous year.

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