Sequoia and Tiger Global-backed car servicing startup GoMechanic Business has been acquired by the Lifelong Group as the majority shareholder under Servizzy. This comes two months after GoMechanic founders admitted to financial irregularities and the investors began an insolvency process.
The financial details of the acquisitions were not clear. But it will certainly provide some respite to debt venture firms Stride Ventures, which had over Rs 100 crore invested in the startup.
The official spokesperson from Lifelong Group said, “Acquisition of the GoMechanic business, aligns with our strategic vision of synergising the Lifelong Group’s proven expertise in the automotive industry. We are focused on building upon GoMechanic’s business journey, and will continue revolutionizing the Indian automotive service and repair industry.”
The Lifelong Group is an Indian company established in 1985 and has been looking to expand its operations in the automotive service and repair industry.
“The Servizzy consortium, to be led by the Lifelong Group, emerged as the strongest bid in this process for the acquisition of the GoMechanic Business in accordance with the terms and conditions contained in the agreement,” said a statement from Lifelong Group.
Due to the recent financial difficulties at GoMechanic, the board and shareholders with support from Stride Ventures initiated a speedy and widely publicised sale process to ensure the continuity of business, said a statement from the company.
“This transaction will assist in preserving the ecosystem at large and also enable providing continued livelihood to the employees at Gomechanic.”
The car servicing platform navigated the recent challenges by continuing operations across 800 workshops and servicing 30,000 vehicles in January. Ultimately showcasing the strength of its core business model and the undeniable value creation it offers.
It was still not clear if the investors of GoMechanic were going to take any action against the founders of the company. In January this year, co-founder Amit Bhasin in a LinkedIn post accept the fraud. “Our passion to survive the intrinsic challenges of this sector, and manage capital, took the better of us and we made errors in judgment as we followed growth at all costs, including in regard to financial reporting, which we deeply regret,” said Bhasin in his post.
After this Sequoia Capital along with other investors ordered a forensic audit of the firm’s business by EY. However, so far the details of the audits have not been shared.
This is the second Sequoia Capital-backed company that has been acquired after a fraud. Singapore-based Zilingo too sold some of its assets to potential buyers.