Delhivery aims for $4 bn valuation
Delhivery’s valuation for the IPO is higher than the estimated valuation of $3 billion
Cash-rich startup Delhivery is eyeing a valuation of at least $4 billion for its proposed upcoming initial public offering (IPO), which is expected in the March quarter of the current fiscal, two people with direct knowledge of the matter confirmed this on the condition of anonymity.
Delhivery’s proposed valuation for the IPO is higher than the current estimated valuation of around $3 billion since the demand for specialized techheavy logistics and supply chain firms is expected to witness an unprecedented surge in the wake of the Covid-19 pandemic that has restricted human movements and involvement of middlemen in the delivery business, which is how traditional logistics and transportation companies work.
A Delhivery spokesperson declined to comment.
Delhivery gets a majority of its revenues—65-70%, from e-commerce activities. “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,” said the first person.
Delhivery is likely to offload 10-15% stake to the public in the proposed IPO for $500-600 million, said the two people, adding that the draft red herring prospectus could be filed with the Securities and Exchange Board of India (Sebi) next month or by August.
Additionally, during the IPO, a secondary sale window via the offer for sale(ofs) mechanism could be provided by Delhivery’s bankers to offer an exit opportunity for some of the existing investors in Delhivery.
“Some of the early stage investors including The Carlyle Group, Tiger Global, Multiples and Fosun could consider a part-exit of their holdings in Delhivery through the OFS window during the IPO,” said the first person.
The OFS issue, which will be meant for providing an exit to early existing investors, will be over and above the $500-600 million float meant for the public in the IPO, said the two people.
On Monday, The Economic Times reported that the logistics tech company has constituted a board sub-committee for its IPO and mergers and acquisitions in January. “We are going into a public listing sitting on $550 million in cash and we don’t burn money,” said Sahil Barua, co-founder and CEO, Delhivery, according to the report.
Last month, the startup disclosed it had raised $277 million in a round led by Boston-headquartered investment firm Fidelity, which was joined by Singapore’s sovereign wealth fund GIC, Abu Dhabi’s Chimera, and UK’S Baillie Gifford.
This fund raising valued Delhivery at $3 billion.
Mashayoshi Son-led Softbank Vision Fund, Tiger Global Management, Times Internet, The Carlyle Group and Steadview Capital have together invested about $1.23 billion in Delhivery.
In 2011, Delhivery had started as a food delivery firm but over time the company has grown to be a full-fledged technology driven logistics company operating in at least 2,200 Indian cities spanning across 17,500 zip codes.
Delhivery operates in the logistics space for sectors including mobile phones, laptops, consumer electronics, fashion, pharmaceuticals, health-care and hygiene, lifestyle, personal care and so on.
In March 2019, Delhivery became a unicorn (a startup with over $1 billion ) after raising $395 million in a Series F funding round from Softbank.
Carlyle Group and Chinese conglomerate Fosun International, both existing investors then, had also contributed to that round in 2019.
Delhivery had received the remaining $45 million from Carlyle Group and Fosun International. Carlyle invested through its special purpose vehicle CA Swift Investments.
Softbank owns a stake of 23.41% in Delhivery while Carlyle has a shareholding of 12.39%. Earlier in March 2017, Carlyle, along with existing investor Tiger Global had invested $100 million.
Private equity firm Multiples Alternate Asset Management, venture capital firm Nexus Venture Partners and digital business firm Times Internet Ltd. had invested in Delhivery during previous rounds at the early stage of Delhivery’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.