Pig­gy­bank $100-m Fresh Del­hivery Ex­pected at Lo­gis­tics Co

The Economic Times - - Disruption: Startups & Tech -

A roundup of top fund­ing deals of the day

Payal Gan­guly & Mad­hav Chan­chani

Ben­galuru: Lo­gis­tics com­pany Del­hivery is in ad­vanced talks with pri­vate eq­uity ma­jor The Car­lyle Group and Chi­nese con­glom­er­ate Fo­sun to raise fresh fund­ing of about $100 mil­lion (`673 crore) ac­cord­ing to two peo­ple aware of the talks, who es­ti­mate the Delhi-based firm could be val­ued at about $700 mil­lion (`4,700 crore), if the trans­ac­tion is suc­cess­ful.

“Car­lyle is lead­ing the fund­ing round and Fo­sun is also in talks to par­tic­i­pate in the trans­ac­tion,” said one per­son cited above.

The deal will mark the fifth round of fund­ing for Del­hivery, which had raised $85 mil­lion led by Tiger Global Man­age­ment in May 2015, fol­lowed by a bridge round of $10 mil­lion from ex­ist­ing in­vestors Tiger Global, Times In­ter­net and Nexus Ven­ture Part­ners last year. Del­hivery CEO Sahil Barua did not re­ply to email queries from ET on the de­vel­op­ment. A Car­lyle Group spokesper­son and Fo­sun Kin­zon Cap­i­tal also de­clined to com­ment on the de­vel­op­ment.

When com­plete, this round of fund­ing will be one of the largest in the ecom­merce-fo­cused lo­gis­tics space. In the last one year, the sec­tor has seen clo­sure of com­pa­nies like Go­javas and con­sol­i­da­tion of last-mile de­liv­ery com­pa­nies like Opinio and Runnr.

Tech­nol­ogy-en­abled lo­gis­tics busi­nesses are ex­pected to emerge as the next big mar­ket, grow­ing from $1.4 bil­lion in 2015 to $9.6 bil­lion by 2020, ac­cord­ing to a re­port by in­vest­ment bank Aven­dus Cap­i­tal. Sur­face trans­port lo­gis­tics provider Rivigo raised $75 mil­lion from War­burg Pin­cus in Novem­ber, truck ag­gre­ga­tor Black­buck is also in talks with World Bank arm IFC and Sands Cap­i­tal for a new round, ac­cord­ing to two sources fa­mil­iar with the de­vel­op­ment. In­vestor in­ter­est in the sec­tor is also led by over­seas de­vel­op­ments like the $1.4 bil­lion IPO of China’s ZTO Ex­press late last year on the New York Stock Ex­change, the largest list­ing from China af­ter Alibaba in 2014.

The IPO gave Se­quoia Cap­i­tal China a 16-fold re­turn, peg­ging value of its stake at over $1 bil­lion.

In an in­ter­view to ET in Oc­to­ber 2016, Barua had said Del­hivery was on track to be­com­ing prof­itable by fis­cal 2018 and was prepar­ing for a pub­lic of­fer­ing.

“We are a prof­itable com­pany and this will re­flect in our re­sults for the fis­cal 2018. We are on track to hit $120 mil­lion in rev­enues for FY 2016-17, which is an 80% growth over last year. We should de­liver close to 75-80 mil­lion parcels dur­ing this pe­riod,” he told ET. How­ever, this was be­fore de­mon­eti­sa­tion im­pacted the vol­umes for ecom­merce com­pa­nies in turn af­fect­ing the busi­ness for lo­gis­tics com­pa­nies.

Del­hivery had regis­tered a rev­enue of ₹ 524 crore in fis­cal 2016 with losses mount­ing to ₹ 317 crore, ac­cord­ing to data ag­gre­ga­tion ser­vice Tofler. The com­pany had a rev­enue of ₹ 228 crore and a loss of ₹ 71 crore in fis­cal 2015.

Del­hivery had shut down some of its ful­fil­ment cen­tres and cut down on staff as a mea­sure to con­trol costs

In 2016,

of the view that af­ter reach­ing cer­tain scale, lo­gis­tics cos need to diver­sify to other in­dus­tries

Ex­perts are

Ecomm lo­gis­tics re­quires sig­nif­i­cant in­vest­ments. Since firms ser­vic­ing ecomm lo­gis­tics have had to scale up in a short pe­riod of time, some amount of cash burn is re­quired to build the busi­ness

PRAHLAD TANWAR, Di­rec­tor of Trans­port and Lo­gis­tics, KPMG In­dia

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.