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Delhivery gets SEBI approval for ₹7,460 crore IPO

Supply chain unicorn Delhivery has received approval from the markets regulator Securities and Exchange Board of India (SEBI) to raise ₹7,460 crore through an initial public offering (IPO). 

Delhivery gets SEBI approval for %u20B97,460 cr IPO
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January 18, 2022: Supply chain unicorn Delhivery has received approval from the markets regulator Securities & Exchange Board of India (SEBI) to raise ₹7,460 crore through an initial public offering (IPO).

The IPO includes a fresh issue of equity shares worth ₹5,000 crore and an offer for sale (OFS) component of ₹2,460 crore by existing shareholders, according to the draft offer prospectus filed by Delhivery.

The markets regulator gave its nod to the Gurugram-based Delhivery last week. Delhivery's IPO will be an offer to sell shares with a face value of ₹1 each, including the OFS part of the offer, along with the premium as decided at the time of the issue.

Under the OFS, Delhivery's co-founders - Kapil Bharati, Mohit Tandon and Suraj Saharan - will sell shares worth ₹14 crore, ₹40 crore and ₹6 crore, respectively. Existing investors Carlyle Group and SoftBank will sell shares worth ₹920 crore and ₹750 crore, respectively. Deli CMF Pte, a wholly-owned subsidiary of private equity fund China Momentum Fund will sell shares worth ₹400 crore, and Times Internet will sell shares worth ₹330 crore.

Delhivery has a pan-India network and provides services to 17,045 postal index number (PIN) codes as of June 30, 2021. It provides supply chain solutions to over 21,000 active customers like e-commerce marketplaces, direct-to-consumer e-tailers and enterprises.

Some background & industry story
Delhivery was incorporated as SSN Logistics Private on June 22, 2011. The name was later changed to Delhivery Private Limited on December 8, 2015. The company was re-named Delhivery Limited on October 12, 2021.

The Indian logistics sector presents a large addressable opportunity with a direct spend of $216 billion in fiscal 2020. The sector is expected to grow to $365 billion by fiscal 2026, driven by:

  • Strong underlying economic growth
  • The favourable regulatory environment in logistics, resulting in the evolution of efficient supply chain formats
  • Improvement in India’s transportation infrastructure, especially highway connectivity
  • Growth of the domestic manufacturing sector, driven by favourable policy support and increased domestic and foreign investments

According to a report by RedSeer Report, exclusively commissioned and paid for by Delhivery in connection with the offer, the company reported revenue from operations of ₹3,647 crore in the financial year 2021, one billion + parcels covered, over 12 million sq. ft logistics space and team size of 66,000+. The company had a loss of ₹416 crore in FY21.

Growing through M&As, investments
Delhivery is expected to utilise up to ₹1,250 crore of the net IPO proceeds towards funding inorganic growth through acquisitions and other strategic initiatives.

Delhivery had acquired a 100 percent stake in rival express logistics player Spoton Logistics for $200 million in August 2021.

While many perceived the Delhivery-Spoton deal as a supplementary addition, market experts noted that it is a complementary union of two leaders in two different segments (B2C and B2B) of express distribution. Headquartered in Bengaluru, Spoton grew from ₹180 crore revenue in 2012 to more than a ₹1,000 crore run rate in 2020. In May 2021, the company had announced that it had grown close to 10 percent YoY in revenue in FY2021,

In July 2021,Fedex Express had announced an investment of $100 million in Delhivery.

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