India: Delhivery eyes $4b valuation for IPO in March quarter

Visual from Delhivery website

Delhivery is weighing a valuation of $4 billion for its proposed public listing in the March quarter, said two people with direct knowledge of the matter.

This would mark an increase of about a third from the $3 billion at which the company was valued last week in its latest fundraising round, underscoring the strong fillip to the logistics tech startup’s business during the pandemic.

Delhivery is likely to sell a 10-15% stake for $500-600 million through the planned initial public offering (IPO), the people cited above said, requesting anonymity. They said the company could file its draft prospectus with the Securities and Exchange Board of India (Sebi) either in July or August for the share sale.

Delhivery, which is heavily reliant on technology, unlike traditional shippers, is gaining from a surge in demand during the pandemic that has restricted human movement and involvement of middlemen in the logistics business.

The company earns as much as 65-70% of its revenue from e-commerce firms. “Delhivery’s valuation could go up by at least 25-30% till the time of the IPO launch since the company’s revenue is steadily rising and the books are flush with cash,” one of the two people cited above said.

A spokesperson for Delhivery declined to comment. A spokesperson for Multiples, which has a small stake in Delhivery, declined to comment.

Delhivery’s rivals include FedEx, Blue Dart, Ecom Express, Gati and XpressBees.

The second person said the IPO could also see an offer for sale (OFS) by existing investors of Delhivery to provide an exit opportunity to some of its early investors.

“Some of the early-stage investors, including Carlyle Group, Tiger Global, Multiples and Fosun, could consider a part-exit of holdings in Delhivery through the OFS (offer for sale) window during the IPO,” the second person said, adding the issue would be separate from the public issue.

On Monday, The Economic Times reported that Delhivery set up a board sub-committee for its IPO and mergers and acquisitions in January. The company has $550 million in cash, the report said, citing co-founder and chief executive Sahil Barua.

Last week, the Gurgaon-based startup said in a regulatory filing that it raised $277 million in a round led by Boston-based investment firm Fidelity and joined by Singapore sovereign wealth fund GIC, Abu Dhabi’s Chimera, and UK’s Baillie Gifford. The fundraising round valued Delhivery at $3 billion.

Masayoshi Son-led SoftBank Vision Fund, Tiger Global Management, Times Internet, Carlyle Group and Steadview Capital have so far invested a total of about $1.23 billion in Delhivery.

Delhivery began operations in 2011 as a food delivery firm, but, over time, it grew to become a full-fledged technology-driven logistics firm operating in at least 2,200 Indian cities spanning 17,500 pin codes.

The firm operates in the logistics space for sectors such as mobile phones, laptops, consumer electronics, fashion, pharma, healthcare and hygiene, lifestyle and personal care.

In March 2019, Delhivery became a so-called unicorn—a startup with more than $1 billion valuation—after raising $395 million in a Series F funding round from SoftBank. Carlyle Group and Chinese conglomerate Fosun International, both existing investors at the time, also took part in that round by investing a combined $45 million.

SoftBank owns 23.41% of Delhivery, while Carlyle has a 12.39% stake. Carlyle, along with existing investor Tiger Global, had invested $100 million in Delhivery in March 2017.

Private equity firm Multiples Alternate Asset Management, venture capital firm Nexus Venture Partners, and digital business company Times Internet Ltd had invested in Delhivery at the stage of the startup’s inception.

Delhivery’s business is different from other conventional logistics firms since the company’s platform considerably decreases the involvement of brokers and uses its own assets such as trucks for transportation. This reduces the overall carrying cost, chances of theft, damages and delays.

Delhivery’s company website claims to have delivered more than 1 billion orders, and it works with more than 10,000 customers, including all of India’s largest e-commerce companies and leading enterprises.

The startup narrowed its net loss by 85% in fiscal 2020 to 269 crore from 1,772.70 crore in FY19.

Revenue jumped 76% to 2,988.6 crore in FY20 while it cut expenses by 6% to 3,250.4 crore.

This article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.