Piggybank $100-m Fresh Delhivery Expected at Logistics Co
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
of the view that after reaching certain scale, logistics cos need to diversify to other industries
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