Delhivery chief executive navigates market meltdown
Sahil Barua, chief executive officer (CEO) of logistics startup Delhivery Ltd, minces no words about the process of going public in what’s shaping up to be an historic meltdown in the technology industry. “It was nerve-wracking,” said the 37-year-old, who is also a co-founder.
The initial public offering (IPO) last week came only after months of discussions with potential investors and investment bankers, Barua said in a video chat this week. Executives paid multiple visits to would-be backers to explain business models and numbers at the company based in Gurugram.
Barua and his team slashed the size of the offering by about 30% at the beginning of May and then decided to price shares conservatively, essentially sacrificing some cash in the short-term to try to avoid a tumble for investors. Shares are now up 10% from Delhivery’s debut, which he thinks signals solid appetite for risk in India’s public markets despite a drop in financing from venture capital firms.
“Technology stocks had corrected more than 20% in the period between filing our initial draft documents to our IPO so we modified our pricing,” Barua said. “We decided we’d rather have modestly-priced shares which rise rather than tumble on listing.”
Shares, which debuted at ₹487 each, closed Wednesday at ₹536.
That the founders weren’t selling any shares in the firm sent the right signal to the market, he said. Although retail investors bid for only about half the shares that were on sale, institutional investors flocked to the stock, resulting in an oversubscription. “Retail investors have a hard time understanding why new-age technology companies make losses,” he said.
A rout in technology stocks is resetting expectations for the venture capital ecosystem, which has grown dependent on a flood of cash from privately held funds to finance money-losing operations. Delhivery— which provides last-mile delivery, warehousing, and cross-border logistics support to a variety of companies—has been grabbing market share by spending its cash on buying smaller rivals. It’ll continue to chase acquisitions with the proceeds of the IPO, Barua said.
Delhivery posted a fourth quarter loss of ₹120 crore on revenue of ₹2,070 crore this week.