Delhivery To Reduce IPO Size To INR 5,500 Cr Amid Increasing Market Instability

IPO-bound logistics aggregator Delhivery is likely to cut down its initial public offering (IPO) size from INR 7,460 Cr per its draft red herring prospectus (DRHP) to INR 5,500 Cr, amid increasing market instability following the current geopolitical situation.

The logistics unicorn held a board meeting on Saturday to discuss the timeline for its IPO. The board has cleared the plan with the offer launching right after the closure of the LIC IPO. Incidentally, LIC IPO’s subscription window closes on May 9.

“The idea is to open the subscription window after LIC so institutional investors can finalise allocations for Delhivery IPO basis the allotments they get for LIC,” a source cited by an ET report said. 

The Gurugram-based unicorn had originally filed its DRHP filing with plans to raise a total of INR 7,460 Cr. Its offer comprises a fresh issue of INR 5,000 Cr and an INR 2,460 Cr offer for sale (OFS) by existing shareholders, including a share sale of up to INR 750 Cr by SoftBank.

The INR 2,460 Cr OFS includes stake sale by other investors Carlyle Group, Nexus Venture Partners and Times Internet and Delhivery founders Kapil Bharati, Mohit Tandon and Suraj Saharan.

However, these plans look set to be revised, with the total offer price to be reduced to as low as INR 5,500 Cr, down 26.27% from its original offer.

It is prudent to note here that Delhivery had its IPO plans approved by the Securities and Exchange Board of India (SEBI) in January 2022. However, it has postponed the sale citing market uncertainties.

Kotak Mahindra Capital, Morgan Stanley, BofA Securities, and Citigroup are the issues’ bankers.

In its draft prospectus, the logistics startup said that the proceeds from the OFS will not be routed to the company and the targeted INR 2,460 Cr from the offer for sale will not form part of the net proceeds.

Out of the net proceeds of INR 5,000 Cr, the company will utilise INR 1,250 Cr or 25% of the proceeds for funding inorganic growth through acquisitions and investments. Further, half of the proceeds (INR 2,500 Cr) will be used for financing organic initiatives.

It also plans to utilise up to 25% of the net process for general corporate purposes. However, the amount will be finalised based on the offer price.

The company’s shareholding pattern is as such.

Masayoshi Son-led SoftBank holds 141,593,300 equity shares, including those accrued upon conversion of CCPS (compulsory convertible preference shares) through SVF Doorbell (Cayman) Ltd, thereby holding a 22.78% stake in Delhivery.

Washington-headquartered Carlyle Group owns a 7.42% stake in the company through CA Swift Investments.

Further, Singapore-based Deli CMF Pte Ltd is another selling shareholder and holds 6,879,000 equity shares or a 1.11% stake in the company. Also, Times Internet, the digital arm of Times Group, holds a 5.10% stake with 31,703,900 equity shares.

Delhivery founders Sahil Barua, Mohit Tandon, Suraj Saharan and Kapil Bharti hold a mere 6.97% in total.

Delhivery offers logistics services such as express parcel transportation, LTL and FTL freight, reverse logistics, cross-border, B2B & B2C warehousing, end-to-end supply chain services and technology services.

It provides supply chain solutions to 21,342 customers such as ecommerce marketplaces, direct-to-consumer e-tailers and enterprises and SMEs across several verticals such as FMCG, consumer durables, consumer electronics, lifestyle, retail, automotive and manufacturing.

Founded in 2011, Delhivery has raised $1.4 Bn in funding across 13 funding rounds.