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IPO-Bound Delhivery Raises INR 2,347 Cr From 64 Anchor Investors

IPO-Bound Delhivery Raises INR 2,347 Cr From 64 Anchor Investors

About 48 Mn shares were allotted to anchor investors at INR 487, the upper price band of the IPO

Some of the foreign participants reportedly included marquee names such as Tiger Global, Bay Capital, Steadview, Fidelity, among others

14.59 Mn shares were allotted to seven domestic mutual funds such as HDFC, SBI, ICICI Prudential, Franklin Templeton, Invesco, Nippon and Mirae

Ahead of its much anticipated initial public offering (IPO), logistics unicorn Delhivery has raised INR 2,347 Cr from 64 anchor investors, including Tiger Global, Bay Capital, Steadview, Fidelity. 

According to the company’s filings, 48 Mn shares (4,81,87,860 to be precise) were allotted to anchor investors at INR 487, the upper price band of the IPO.

Foreign investors such as – Baillie Gifford, Schroders, Amansa, Aberdeen Standard Life, GIC, Government Pension Fund Global and Invesco Hong Kong; and domestic mutual funds such as HDFC, SBI, ICICI Prudential, Franklin Templeton, Invesco, Nippon and Mirae also participated in the anchor share sale.

Anchor Investors are qualified institutional investors that are allotted shares in the company before the IPO is made public. These investors are bound to hold the shares during the lock-in period and are not allowed to sell them before that.

The startup’s IPO will open for subscription today (May 11) and will close on May 13. The unicorn has set the price band for its IPO at INR 462-487 per share. At the upper end of the price band, the unicorn will have a valuation of INR 35,283 Cr. 

Bids can be made for a minimum of 30 shares and multiples of 30 shares thereafter. The share allotment will be finalised on May 19. Shares will be credited to the demat account of the successful bidders on May 23 and the stock will debut on the bourses on May 24. 

Will Delhivery’s Bet Pay Off?

Delhivery plans to raise INR 5,235 Cr via the public issue. The startup will raise INR 4,000 Cr via fresh issue of shares and INR 1,235 Cr through an offer for sale (OFS).

The unicorn had earlier planned to go for an INR 7,460 Cr listing but a volatile market forced it to slash its issue size. Such was the uncertainty that CEO Sahil Barua had told a news outlet, in late March, that the company would delay the IPO.

“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,” CEO Barua had said then.

It was in May however that the plans for the company to get listed gathered steam. The company set its IPO price band and lined up investors who would offload their stake. It had first converted into a public company back in October last year and had filed its draft red herring prospectus (DRHP) with the market regulator SEBI in November 2021. SEBI approved the proposal in January this year and the IPO has been hanging in the air ever since.

But, while the unicorn looks all set for its IPO, questions remain. The overall market volatility continues to plague the public bourses. On May 10, major new age tech stocks such as Zomato, Nykaa and PolicyBazaar tanked anywhere between 2-7%. These stocks have iped off 40-60% of the investor wealth since their mega debuts last year.

As if this was not enough, government announcements have not made things any easier. The recent announcement of Reserve Bank of India’s (RBI’s) to hike the repo rate by 40 basis points led to a bloodbath on the Dalal Street, wiping off nearly INR 6.27 Lakh Cr of investor wealth on a single day on May 4.

There have also been apprehensions over the mega LIC IPO which could squeeze liquidity from the market and adversely hamper Delhivery’s prospects. The LIC PO which closed on May 9 was subscribed 2.95 times and generated bids worth INR 43,933 Cr. In the absence of liquidity in the market, the much touted debut could go astray for the startup.

However, many of the domestic brokerage firms have recommended subscribing to Delhivery IPO. Yes Securities said, “We believe Delhivery’s asset light business model and its cutting‐edge engineering and automation capabilities and its new age technologies will help the company leverage its operating efficiencies and improve profitability in the coming years.”

The unicorn will utilise INR 2,000 Cr from the proceeds to fund organic growth initiatives such as expanding network infrastructure and upgrading proprietary logistics operating systems.  Delhivery will also use the rest of the proceeds to fuel inorganic growth opportunities via acquisitions and other strategic initiatives.

Delhivery was founded in 2011 by Tandon, Sahil Barua, Bhavesh Manglani, Bharati and Saharan. It 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 last raised $125 Mn 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 2021. In total, the startup has raised $1.4 Bn till date.

Delhivery reported a consolidated net loss of INR 129.58 Cr during the first quarter of FY22 on a revenue of INR 1,317.72 Cr.Its freight servicing expenses stood at INR 867.9 Cr in Q1 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, and is estimated to grow to $380 Bn by 2025 at a CAGR of 10-12%.