The listing will be managed by Kotak Mahindra Capital, BofA Securities, Morgan Stanley, and Citigroup
SoftBank and Carlyle likely reduce their offer for sale (OFS) allocations in line with the reduced issue size
Delhivery’s share sale goes public a day after the close of LIC IPO
Logistics startup Delhivery’s initial public offering (IPO) will open for the public on May 11 and close on May 13.
According to a report, Delhivery would reduce its issue size from INR 7,460 Cr to INR 5,200 Cr to better suit the current market conditions. It said the startup’s backers SoftBank and Carlyle were likely to reduce their offer for sale (OFS) allocations in line with the reduced issue size.
With the share sale date public, the startup is likely to file its Red Herring Proposal (RHP) anytime now. It is pertinent to note that Delhivery’s share sale goes public a day after the close of LIC’s IPO.
The listing will be managed by Kotak Mahindra Capital, BofA (Bank of America) Securities, Morgan Stanley, and Citigroup.
The startup was founded in 2011 by Mohit Tandon, Sahil Barua, Bhavesh Manglani, Kapil Bharati and Suraj Saharan. Delhivery provides a full suite of logistics services such as parcel transportation, FTL (full truckload) and LTL (less than truckload) freight, reverse logistics, cross-border, B2B & B2C warehousing, end-to-end supply chain services and technology services.
The startup had last raised $125M in its Series I funding round led by VC firm Addition in September last year. It had previously raised $275 Mn in its Series H funding round in May of 2021. In total, the startup has raised $1.4 Bn till date.
Decline In New-Age Tech Stocks
Delhivery had filed its Draft Red Herring Proposal (DRHP) with the market regulator Securities and Exchange Board of India (SEBI) in November last year. The startup then planned to raise INR 7,640 Cr via its IPO which included a fresh issue of shares worth INR 5,000 Cr and an OFS of INR 2,460 Cr.
SEBI approved the proposal in January this year. Since then, there have been apprehensions about whether Delhivery would actually proceed with the IPO.
Earlier, media reports had emerged that the logistics unicorn was looking to defer the IPO. Later, CEO Sahil Barua said in an interview, “Our view was that there was no point in taking our investors through a bumpy ride in this quarter (considering market conditions) and having to answer questions which aren’t related to the business. So we decided to wait it out.”
Market volatility has led to a bloodbath in the stocks of new-age tech startups such as Zomato and PolicyBazaar. Indian tech stocks have been witnessing a major slump ever since Russian President Vladimir Putin declared a war on Ukraine. The situation has further been compounded by a major correction in the US public markets and the prospects of interest rate hikes by the Fed.
The startup also continues to burn cash. During the first quarter of FY22, it recorded a consolidated net loss of INR 129.58 Cr on a revenue of INR 1,317.72 Cr.
The startup has been bogged down by increasing costs especially in verticals such as freight handling, servicing and employee benefits. Its freight servicing expenses stood at INR 867.9 Cr in FY22, while employee benefit expenses were around INR 206.45 Cr.
According to Statista, the Indian logistics market stood at around $250 Bn in FY21. It is estimated to grow to $380 Bn by 2025 at a CAGR of 10-12%.