Auto Shopping Website Revs Up IPO Speculation

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Santa Monica’s TrueCar Inc. could be cruising into a stock offering in the coming year.

Bloomberg News reported last week that the six-year-old online automotive shopping service had retained investment banks Goldman Sachs Group Inc. and JP Morgan & Chase Co. and might file for an initial public offering in the first half of the year.

Rumors of an impending IPO have swirled around the company since early last year after a $200 million fundraising round in September 2011. Investors in that round included Century City’s UpFront Ventures.

Though he would not comment on the TrueCar situation, Sameet Sinha, a senior analyst covering Internet companies at investment bank B. Riley & Co.’s San Francisco office, said the market was particularly receptive to tech IPOs.

“The climate for IPOs is pretty strong,” he said. “We’ve had some failures, but some nice IPOs like Twitter. You can expect to get unprecedented valuations for a strong company’s IPO right now.”

If it goes, TrueCar would be the first local tech company to go public since Cornerstone OnDemand and Demand Media went in 2011. Legal document website LegalZoom filed its registration statement with the Securities and Exchange Commission in August 2012 but pulled its offering, citing adverse market conditions.

TrueCar, which analyzes sales data to help consumers find a fair price for a car, has seen its revenue growth accelerate over the past four years.

The company reported 2012 revenue of $82.4 million, up 116 percent from the $38.1 million it posted in 2010. The 320-person company, with additional offices in Boston and Jacksonville, Fla., has made the Business Journal’s list of Fastest Growing Private Companies four years in a row.

The growth comes as TrueCar has expanded the network of dealerships with which it works. Dealerships pay TrueCar a fee of about $300 for each sale referred through the website. The company, which said it works with nearly all of the top 50 dealer groups, has contracts with 6,700 dealerships, more than twice the number it had a year ago.

Chief Executive Scott Painter could not be reached for comment on the Bloomberg report. In an interview last month, he said TrueCar had a 2 percent share of the new-car buyer market, leaving plenty of room for further growth.

“This is not about go big or go home,” he said at the time. “This is about building a responsible, profitable business.”

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