This writer wrote about advanced conversations between Naspers and Carousell in June 2018, but an investment wasn’t completed and announced until April the following year. Prior to the deal becoming official, OLX had intended for Carousell to become a proxy in Southeast Asia, with the investment eventually leading to a full majority ownership in the future.

Such is its familiarity with classifieds in the region and its deal-making nature that there’s a case to be made that OLX may have played a part in the 701Search merger. That the deal came little more than six months after OLX became a Carousell shareholder and board member only adds weight to this argument. OLX had, as mentioned, cherry-picked two 701Search businesses to merge with its local entities in Thailand and Indonesia, so why not finish the job and pin the remainder to its Carousell asset. However, Malani, the Carousell CFO, claimed OLX was not actively involved in facilitating the merger.

“It wasn’t OLX that got the deal to the table,” he explained. “It was a direct conversation that we were having with Telenor. Once we started the dialogue [and] sensed that there was an interesting combination and interesting mix, we took the matter to the board, where OLX is present.”

Regardless, OLX and its “diverse experience” worldwide has provided strong input for Carousell, though Malani stresses its involvement is only at the board level rather than operational. It’s a similar situation with Telenor, which has board representation through investment executive Svein Henning Kirkeng and Johan Rostoft. The latter leads the telco’s online classifieds business and was previously the managing director of 701Search.

Future in motion

The next phase for Carousell will likely focus on developing strong premium verticals. The business has become popular with younger audiences because of its mobile-friendly design. However, the investor quoted earlier suggested that it may need to embrace a more traditional, web-based approach if it is to tap lucrative verticals the way 701Search has.

In the global classifieds space, the traditional money-spinners have typically been real estate, automotive and recruitment. Craiglist Inc, which started in 1995 and is one of the originals in the space, is estimated to have crossed $1 billion in annual revenue last year despite the growth of social media, e-commerce and other modern-day internet services. A whopping nearly 70% of its sales are said to have come from recruitment listings, according to figures released by analyst firm AIM Group earlier this year.

These verticals, however, are not nearly as lucrative in Southeast Asia. Singapore—Carousell’s home market—is dominated by influential players in those sectors, including market leader JobsCentral in the jobs space, billion-dollar firm PropertyGuru in real estate, and, in automotive, ambitious startups like Carro–which has raised over $100 million from investors. That said, Malani claims leadership in property rentals in Singapore. The company also acquired automotive portal Caarly in 2016 on undisclosed terms in a move to kickstart its monetisation push—it is unclear how that acquisition has developed. 701Search’s assets and experience, though, could be a massive boost in these areas.

Malani said Carousell plans to work closely with 701Search to share ideas and best practices across various business units, but that’s dependent on a successful integration.

Inspiring Factors

Carousell has come a long way. While it will forever be the plucky startup that inspires a new generation of Singaporean founders, the business today is unrecognisable from what it started as. With OLX and Telenor among its core shareholders and through investment and consolidation deals, it has picked up enough speed to become a part of the global classifieds elite. How it fares following this merger will dictate whether Carousell continues in its current guise and adds more pieces through deals, or whether the company itself becomes a building brick in someone else’s classifieds wall.

Anyone looking for clues on possible outcomes should recall that OLX took full control of Russian classified giant Avito in January 2019 for a cool $1.16 billion. Avito’s own growth took off following a 2013 merger between two OLX properties, and a $50 million capital injection that valued the new entity at around $570 million. Already, many of the ingredients required to follow that recipe are firmly in place.