The two Carsales.Com Ltd (ASX: CAR) representatives working as non-executive directors at iCar Asia Ltd (ASX: ICQ), Mr Cameron McIntyre and Mr Ajay Bhatia, just resigned from iCar Asia, effective from 9 December.
With less than one month's notice and no warning of the departure, it suggests there could be a shakeup coming for iCar Asia, perhaps in the form of either a takeover offer or a sale of Carsales' stake in iCar.
As of the most recent notice of substantial holding on 14 September, Carsales.Com was a 16.5% shareholder in iCar Asia.
While the announcement said nothing at all about the reasons for the resignation, it suggests there will be a change in the relationship between the two companies. Carsales first gained some ability to appoint a director to iCar back in 2013, when it bought 19.9% of iCar. Since then, Carsales has been gradually diluted by a number of capital raisings, and my guess is that Carsales could be looking to sell down its stake.
Why?
Carsales bought into iCar in 2013, but it is unlikely to have been inspired by the company's performance since then. In this article you can see how iCar has struggled to grow revenues, and that's despite an incredible four capital raisings since early 2014.
More pointedly, Mr McIntyre is Carsales' Chief Operating Officer (COO), while Ajay Bhatia is Carsales' Chief Product and Information Officer. With their experience and their first-hand knowledge of the workings of iCar, they're in a very good position to evaluate the potential success (or otherwise) of that investment and I would consider Carsales' next move to be quite telling.
It's not certain what will happen next, but if an experienced industry insider (Carsales) decides to sell out of iCar, it would take a brave investor to suggest they're wrong.
