British unicorn Cazoo debuts on NYSE; raises $1B+ from SPAC deal

In February 2021, British online car retailer, Cazoo, was planning to go public at a valuation of well over £5B (approx €5.7B). In a recent development, the company announced the completion of its merger with a blank check company, AJAX 1.

Cazoo began trading on the New York Stock Exchange on Friday (Aug 27th) under the new ticker symbols, “CZOO” and “CZOO WS”, respectively. The company ended its first day of trading with shares rising by nearly eight per cent.

AJAX I is a newly incorporated blank check company whose purpose is to effect a merger, share exchange, asset acquisition, share purchase, reorganisation or similar business combination with one or more businesses.

Financial Overview

Under the terms of the transaction, AJAX and Cazoo have now combined under a new holding company, Cazoo Group. The Group will receive funds of over $1B before expenses in order to further build its brand and infrastructure across the UK and mainland Europe.

The business combination was unanimously approved by AJAX’s board of directors and approved by AJAX’s shareholders on August 18, 2021, with 95.57 per cent of the votes cast in favour of the transaction.

Founder and CEO Alex Chesterman, and existing Cazoo investors – including media conglomerate the Daily Mail & General Trust (DMGT), which owns the Daily Mail, and venture capital firm Draper Esprit will receive approx $80M in cash from the transaction proceeds.

With this development, Cazoo will continue to be led by Alex Chesterman, along with the existing senior management team, including CFO Stephen Morana. Daniel Och (US investor and founder of AJAX) and Anne Wojcicki (founder of 23andMe) will also join the Cazoo Group board of directors along with Duncan Tatton-Brown (Audit Chair), Moni Mannings (Remuneration Chair), Luciana Berger (ESG Chair), Lord Rothermere (Non-Exec), and David Hobbs (Non-Exec) of D1 Capital Partners.

Growth acceleration

Speaking on the development, Alex Chesterman says, “Today is an important and exciting day for Cazoo as we enter the public markets. Since we announced the transaction earlier this year, we have continued to see record growth in our revenues and gross profit, have brought our UK vehicle reconditioning in-house, providing full control of our operations & logistics, and have started buying and reconditioning cars in mainland Europe ahead of our launch later this year.”

The company has also launched a fully integrated all-inclusive monthly car subscription service in the UK, as well as a car buying service to source inventory directly from customers.

Chesterman further adds, “We remain obsessed with delivering the best car buying and selling experience for consumers across the UK and mainland Europe and the capital raised from this transaction will give us the resources to further accelerate our growth.”

How was Cazoo born?

Cazoo is the brainchild of Alex Chesterman. In 2003, he co-founded LoveFilm, which brought a transformation in the DVD rental market in the UK. Later, in 2008, he came up with Zoopla, which brought transparency and efficiency in the proptech market. Zoopla was later acquired by Silver Lake in 2018 in a £2B (approx €2.3M) deal.

In the same year, 2018, Cazoo was born. “Used cars are one of the last remaining consumer markets yet to benefit from any digital transformation,” the entrepreneur said soon after its launch. It aims to become the “Uber” of the “used car marketplace”. 

Cazoo claims that it wants its customers’ car buying experience to be seamless, transparent, and convenient  – just like purchasing any other product online. The company lists thousands of cars in stock at any time, all stored centrally in the Midlands. They are available either for home delivery anywhere in the UK or for collection from one of Cazoo Customer Centres within 72 hours. Every Cazoo car comes with a full 7-day money-back guarantee and a comprehensive 90-day warranty.

Since its launch, the platform has already sold over 35,000 cars to consumers. And, including the current deal, the company has raised around a total of €1.3B in funding from investors. It has grown its team to over 2,500 employees, mostly through acquisitions.

Recent developments

Earlier this month, the company acquired Smart Fleet Solutions (SFS), a UK-based independent vehicle reconditioning and storage specialist, for an undisclosed sum. 

This deal follows Cazoo’s acquisition of Drover, another UK-based car subscription platform that enabled Cazoo to offer its customers the option of purchasing, financing, or subscribing to the cars on its website with an aim to transform the car buying experience in the country.