Mortgage lender Housing Development Finance Corporation, which also has a venture and realty investment arm, sold its entire stake in the transaction. Another early private equity investor, Phi Capital, sold part of its holding as part of a secondary stake sale. A spokesperson for Mahindra First Choice declined to say whether Cox also invested in the company through a fresh issue of securities.
"This opportunity allows us to partner with a company that has a reputation for delivering high-quality used car products and services to dealers and consumers in the fast-growing Indian automotive market," said Joe Luppino, chief corporate development officer at Cox Automotive.
Atlanta-based Cox Automotive, with $17 billion annual revenue, owns AutoTrader, the largest digital automotive marketplace in the US, and vehicle research platform Kelley Blue Book.
Nagendra Palle, CEO and MD at Mahindra First Choice, there is deep synergy between the two organisations and that the Indian company aims to leverage the US firm's global presence and expertise.
Mahindra First Choice raised $15 million from San Francisco-based Valiant Capital earlier this year.Mahindra First Choice operates about 650 franchise outlets in 300 towns across India. It plans to expand this number to 1,000 outlets over the next three years.
It also runs several online properties including one under the mother brand , online wholesale auction vertical eDiig , and third-party automobile inspection unit Autoinspekt. Besides, it runs vehicle pricing guide Indian Blue Book , used-tractor pricing guideIBBTractor and residual-vehicle tracker IBBResiduals .
The company sold 69,000 used cars for the year ended March 31, 2015, up 30 per cent over the previous year.
Earlier this year, the company raised $15 million from San Francisco-based investment advisory firm Valiant Capital for a minority stake.
Several firms in the online domain facilitate used-car sales. The online ventures have seen a slew of consolidation moves in the past year.
Early this month, automobile classifieds portal CarTrade acquired rival CarWale. German media conglomerate Axel Springer sold its 91.3 per cent stake in CarWale, owned by Automotive Exchange Pvt Ltd, to Car Trade Pvt Ltd as part of the transaction.
There have also been other funding transactions in the sector. In July, Zoomo, a peer-to-peer mobile marketplace for buying and selling used cars, secured Rs 32 crore (around $5 million) in funding from existing investor SAIF Partners.
In January, CarDekho raised $50 million from Chinese investment management firm Hillhouse Capital, Hong Kong-based hedge fund Tybourne Capital, and existing investor Sequoia Capital. Tata Sons chairman emeritus Ratan Tata also invested in the firm in his personal capacity.