Patel Logistics, one of the oldest transportation and logistics firms in the country, plans to launch its ecommerce business. As of now, it is eyeing Tier 2 and Tier 3 cities in western and southern India. Last year, the company had tied up with Amazon for cargo alliance and goods and articles deliveries.
The secured funds will be used to establish new offices and warehouses across the country. “We plan to roll out 50 branches in the next six months, adding about 10 branches per month at present, and expect to touch 300 branches in three years. The funds will be mainly used for this”, said Areef Patel, Vice-Chairman of Patel Logistics.
People in the know-how of the deal have said that as part of the first leg of the transaction, Frontline has invested around $2.8 Mn (INR 19 Cr) and will further invest $2.7 Mn (INR 18 Cr) at a later stage.
As part of the deal, Patel Logistics has issued 7 lakh shares to Frontline Strategy based on preferences and an additional 9.29 lakh warrants, at INR 115 each.
Experts are of the opinion that nearly one-third of the total operational costs of ecommerce companies are logistics spends.
Investors are not shying away from this sector either. In 2015 alone, several logistics companies had raised funds.
- In April, LogiNext Solutions had raised around $451K (INR 3 Cr) from Indian Angel Network.
- In June, online marketplace for freight transportation booking Zinka Logistics had raised about $6 Mn from Flipkart and Accel Partners.
- In August, Bangalore-based LetsTransport raised $1.3 Mn in its seed round of funding led by Singapore-based Japansese venture capital firm Rebright Partners.
- In October, Quifers raised $307K from IAN and Smile Group.
- November saw HipShip raising funds from Rishi Khiani and Inara Capital.
Welcome to Flash Feed, your essential source for breaking news and innovation from around the web – bite-sized and updated all day.