TrueCar Inc., the online auto-shopping service backed by Microsoft Corp. co-founder Paul Allen, filed to raise $125 million in a U.S. initial public offering.
The figure is a placeholder used to calculate fees and may change. TrueCar, based in Santa Monica, California, plans to use the net proceeds from the offering primarily for general corporate purposes, including working capital, operating expenses and capital expenditures, according to a filing with U.S. Securities and Exchange Commission today.
TrueCar, led by Chief Executive Officer Scott Painter, plans to sell stock after U.S. automakers reported their best March sales pace in seven years, putting the annualized rate, adjusted for seasonal trends, at 16.4 million from 15.3 million a year earlier. Founded in 2005, TrueCar helps consumers purchase vehicles using information gleaned from more than 7,000 dealerships, the filing showed.
“As a business we are excited to be in a place where we can really innovate,” Painter said in an interview yesterday. “This is what you should infer from folks like Paul Allen validating and investing in the company, from people like John Krafcik being associated with the company.”
TrueCar reported a 68 percent jump in revenue in 2013 to $134 million, while its net loss narrowed to $25.1 million from $74.5 million, according to the filing.
About 3 percent of new vehicle sales were handled through TrueCar, which funnels interested buyers to car dealers. The company gets $300 from dealers for each customer it refers who buys a new vehicle, and $400 for each used car sale it arranges, Painter said.
Goldman Sachs Group Inc. and JPMorgan Chase & Co. will lead the offering. The company plans to list on the Nasdaq Stock Market under the ticker TRUE.
Vulcan Capital, a private-equity firm headed by billionaire Allen, owns a 9 percent stake in the company. Painter owns 12 percent. TrueCar raised $200 million in September 2011 to fund acquisitions, Painter said at the time.
The company added Krafcik, former head of Hyundai Motor Co.’s U.S. operations, to its board in February. TrueCar announced the appointment in a statement yesterday.
Separately, TrueCar said in today’s filing that the U.S. Federal Trade Commission’s Bureau of Competition is conducting an investigation to determine whether auto dealers that refuse to work with the company have violated parts of the Federal Trade Commission Act. The company said it’s complying with an FTC request to provide documents and information.