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Delhivery seeks Sebi nod for Rs 7,460 crore IPO


New-age delivery and logistics services provider Delhivery filed its draft prospectus with the Securities and Exchange Board of India (Sebi) on Tuesday to raise Rs 7,460 crore through an initial public offering (IPO).

In its draft red herring prospectus (DRHP), the Gurugram-based company said it will raise Rs 5,000 crore through issuance of fresh shares while it will have an offer for sale (OFS) component of Rs 2,460 crore where some of its existing investors will dilute their holdings.

The company is seeking a valuation of around $6-6.5 billion for its listing, ET reported on Tuesday. Existing investors including private equity fund Carlyle, Japan’s SoftBank Vision Fund and Times Internet are selling partial stakes, according to the filing. Kapil Bharati, Mohit Tandon and Suraj Saharan — who are among the five founders of Delhivery — are also listed to sell their shares in the OFS. Times Internet is part of the Times Group, which publishes The Economic Times.

Carlyle is selling shares worth Rs 920 crore while SoftBank is selling Rs 750 crore of its holding. Fosun is selling Rs 400 crore of shares while Times Internet will sell shares worth Rs 330 crore, the DRHP showed. ET
reported the details of the primary and secondary share sale on Tuesday.

Delhivery is expected to be a publicly traded firm before the end of the current financial year.

Top shareholders in DelhiveryETtech

Cash Infusion

Besides providing an exit to investors and employees looking to cash out, the IPO will help the company raise capital for its other business initiatives. According to the DRHP, Delhivery aims to use around Rs 2,500 crore for organic growth initiatives while Rs 1,250 crore will be earmarked for funding the inorganic growth through acquisitions and other strategic initiatives. It will use the remaining amount for general corporate purposes.

In what was its pre-IPO round, Delhivery
raised $125 million in September from Addition, the new fund set up by Lee Fixel, former partner at New York-based investment firm Tiger Global.

A part of this round was through a secondary purchase of shares from China’s Fosun. The Chinese fund sold 1.32% of its 3.8% stake in Delhivery, which was valued at $4 billion post the transaction, as
reported by ET last month.

This round was preceded by a
$100 million cash infusion from strategic investor FedEx Express in August and before that
Delhivery also raised $277 million from investors led by Singapore’s GIC and US-based Fidelity Management.

Aided by the pandemic, the company saw its revenues jump significantly because of increased online commerce, although it continues to make losses.

Pan-India Network

The company reported revenue of Rs 3,646.5 crore in FY21 compared to Rs 2,780 crore a year ago. In FY21, its net loss was at Rs 415.7 crore against almost Rs 269 crore in FY20. For the quarter ending June 2021, Delhivery’s revenue was at Rs 1,317 crore with a loss of over Rs 129 crore during the same period.

For the financial year ending March 31, 2021, the company’s unaudited consolidated revenues stood at Rs 4,644.38 crore. The company made a loss of Rs 595.3 crore for the same period on a consolidated basis. For the first quarter ending June 30, 2021, the company saw its revenues grow to Rs 1,553.9 crore as against a loss of Rs 190.2 crore for the same period, its draft prospectus showed. The consolidated revenues include revenues the group earned through its subsidiary Spoton Logistics, which it acquired in August this year in an all-cash deal worth $300 million.

Delhivery financialsETtech

The 10-year-old company provides a full range of logistics services, including express parcel delivery, heavy goods delivery, PTL (partial truck load) freight, TL (truck load) freight, warehousing, supply chain solutions, cross-border express and freight services, and supply chain software, besides offering value added services such as ecommerce return services, payment collection and processing, installation and assembly services and fraud detection.

It is the largest and fastest growing fully-integrated logistics services player in India by revenue as of FY 2021, a Redseer report commissioned by the company said in the draft IPO papers. Delhivery operates a pan-India network and services almost 17,000 pin codes as of June 30, 2021.

Logistics Boom

According to the Redseer report, the Indian logistics market presents a large addressable opportunity, with direct spends on logistics of $216 billion in fiscal 2020 and is expected to grow to approximately $365 billion by FY26 at a CAGR of 9.1%.

“This growth will be driven by strong underlying economic growth, a favourable regulatory environment, growth of domestic manufacturing, rapid growth of the digital economy and improvements in India’s transportation infrastructure. Within the logistics Industry the express parcel delivery segment, which is highly organised, is expected to grow at a CAGR of approximately 28-32% by value to $10-12 billion by FY 26,” it said.

With the filing of the DRHP on Tuesday, Delhivery joins the likes of other tech-startups such as Nykaa, Policybazaar and Paytm that have tapped the public markets to raise capital this year. Zomato led the way with a stellar listing in July with its Rs 9,000 crore IPO.

Investment banks such as Kotak Mahindra Capital Co, Morgan Stanley, Bofa Securities and Citi are helping the company with the public issue.



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