Blockbuster IPO debuts in the Indian stock markets this year, such as Mrs. Bector, Burger King, and Happiest Minds, have only boosted the country’s young tech startups’ trust to reach the public markets. With two hot tech IPOs in the US stock market, Airbnb and DoorDash, 2020 is coming to a close. The success of those IPOs will undoubtedly impact Indian investors’ confidence in technology startups. Route Mobile, Happiest Minds, CAMs, and Burger King all had recent IPOs that were heavily oversubscribed and debuted with high multiples,” said Anup Jain, Managing Partner of Orios Venture Partners (1).
Several Indian startups, including Zomato, Delhivery, Policybazaar, Freshworks, Flipkart, and Nykaa, are reportedly eyeing the public markets in 2021, while others, such as BYJU’S and Pepperfry, haven’t set a date but are preparing for a significant, fat IPO debut. The Indian government seems to be tolerant of tech IPOs as well. The Securities and Exchange Board of India (SEBI), India’s market regulator, has developed an Innovators Growth Platform (IGP) and recently published a consultation paper seeking feedback on new rules that will enable startups public. (2) “There are some tailwinds urging startups to go public to raise funds and provide investors with a safe exit. According to Ankur Bansal, co-founder, and director of SEBI’s new rules, including easier migration to the mainboard, a shorter holding period, and special privileges, have made IPOs more profitable BlackSoil.
A unique force of a startup: Delhivery
This business has been proving itself a great startup since 2011, and it is now a backbone for the logistics industry. The logistics industry in India is a cornerstone of the Indian e-commerce industry, which Delhivery is leading to be a significant fundraiser for the industry. Last-mile distribution, third-party and transit warehouse management, reverse logistics, payment processing, vendor-to-warehouse, and vendor-to-customer delivery, and more are all available. When Delhivery raised 413 million dollars in a Series F round led by SoftBank Vision Fund, Carlyle Group, and Fosun International in 2019, it became a Unicorn. It was estimated at 1.5 billion dollars at the time (3).
Last-mile distribution, third-party and transit warehousing, reverse logistics, payment collection, vendor-to-warehouse and vendor-to-customer shipping, and more are all available via Delhivery. Times Internet Ltd, which purchased a minority stake in the company in June of last year, is a supporter. The company’s focus is to provide the best service without losing any chances of solving the customer’s dilemma, and it has three responsibilities: distribution, Omni-channel, and data services. It offers goods and services to help customers, small businesses, companies, and their growing team of employees and partners create trust and better their lives.
Over 10,000 customers profit from Delhivery’s unrivaled cost efficiency and pan-India scope. Its goal is to reduce time and distance, making the planet a smaller place for its customers and the billions of people they represent. It is the latest process of selling products. It is a very regular company that did a very odd business, making a beautiful profit and success. They want to be India’s largest and most profitable e-commerce fulfillment company. With three types of customers for their company, Delhivery is constantly striving to provide them with high-quality products that are improving every day and trust (4).
Bhavesh Manglani, Kapil Bharati, Mohit Tandon, Sahil Barua, and Suraj Saharan were among the engineers who formed Delhivery. Sahil, Suraj, and Mohit were day job men, with a strong desire to start their own company, but they were well aware that a successful startup needs a lot of effort. In 2008, all three men worked for Bain & Co, but Suraj and Mohit worked in the management consulting division. Bhavesh Mangalin (COO) is one of Delhivery’s co-founders. Kapil Bharti (CTO), a graduate of the Indian Institute of Technology (Delhi), later joined the two bright minds to realize their dreams and succeed in their companies (5).
Market and growth
With the introduction of GST, the country’s logistics industry, which is currently worth about 160 billion, is expected to grow to 215 billion dollars in the next two years. Then there’s Delhivery’s most extensive reach: they have about 1400 pin codes on their list and over 19,990 sq ft of warehouse space in both Delhi and Bangalore. Delivery has many partners with whom they have collaborated to expand their product scope and keep up with those partners. The business also provides third-party warehousing and transit warehousing.
The company started as a small business with just five employees to handle everything from accounts to product service delivery hookups. Still, as time went by, they employed over 15,000 people to serve as deliverymen, accountants and to keep their customers happy if there was a problem with the product or service. For the fiscal year 2020, the company claims to have a turnover of Rs 2800 crore, with plans to grow to Rupees 6000 to 7000 crore in the next two years. By 2020, Delhivery will have delivered 1.5 million orders every day in over 17,500 pin codes across 2,300 towns and cities in India. Its network of nearly 7,000 drivers and over 5,000 trucks are mainly responsible for this (6).
Funding and Expansion
Accordingly, SoftBank’s Vision Fund will initially invest about 350 million dollars in the Indian logistics business. According to the newspaper, the Japanese company will spend an estimated 100 million dollars on the second deal. With a 32 percent stake, SoftBank Group will become the single largest shareholder, while The Carlyle Group will hold 11 percent. Delhivery was claimed to be considering an initial public offering in May. Mint quoted a source familiar with the situation as saying, “Delhivery is looking to go public, and they have started a process to select investment bankers to advise it on the public offering.”
Fosun International, a Chinese conglomerate, invested 30 million dollars in Delhivery in May 2017. This investment was part of a larger equity funding round in which The Carlyle Group put in 100 million dollars to acquire a minority stake in the company in March of that year. (7) Tiger Global Management led an 85 million dollars Series D round in March 2015, with participation from established investors Multiples Alternate Asset Management, Nexus Venture Partners, and Times Internet Limited. It had previously increased its Series C round, led by Multiples Alternate Asset Management, in September 2014.
Steadview Capital had purchased 25 million dollars or approximately Rs 183 crore in secondary shares in Delhivery from an early investor, ahead of the logistics and supply chain provider’s planned IPO in the next 12 to 15 months. It is the most recent international fund to participate in the Gurgaon-based business. When it raised 413 million dollars in a Series F round led by SoftBank Vision Fund, together with established shareholders Carlyle Group and Fosun International, Delhivery had become a unicorn in 2019. It was estimated at $1.5 billion at the time. “We are happy to partner with the excellent management team of Delhivery, which is transforming the logistics industry in India through ecommerce and conventional industry verticals,” Ravi Mehta, Founder and CIO of Steadview Capital, said in a statement (8).
The Competition Commission of India approved SoftBank Vision Fund’s acquisition of a 22.44 percent stake in logistics company Delhivery later in 2019. According to sources, the transaction is worth over Rs 3,200 crore. The transaction included a subscription of 22.44 percent of Delhivery’s total share capital and, as a result, “potential future acquisition of shares at a price and on certain terms to be negotiated,” according to a filing to the CCI. The CCI said in a tweet that it “approves SVF Doorbell Ltd’s acquisition of 22.44 percent of the total share capital of Delhivery Pvt Ltd”. In a similar tweet, the fair trade regulator authorized CA Swift Investments’ purchase of preference shares in Delhivery via a share subscription agreement.
On Wednesday, Delhivery announced that it would expand its presence in India by opening two new technology offices in Bengaluru and Ahmedabad and creating over 500 new jobs in the region. It currently employs over 350 people and has offices in Gurgaon, Goa, Hyderabad, India, and Seattle, Washington, in the United States. According to the organization, the new hires will be spread through infrastructure, product, and data science functions by the end of the fiscal year. “With tech and data science as the key business differentiators, the current expansion ensures we remain ahead of the curve,” said Kapil Bharati, Co-founder, and CTO of Delhivery. “Bengaluru has a wealth of talent, which we want to tap into.”
Delhivery’s supply chain services serve over 17,500 pin codes in 2,300 cities. Since its inception, it has completed over 850 million transactions and operates with over 10,000 direct clients, including large and small e-commerce players, SMEs, and leading companies and brands. The rapid spread of Covid-19 and the subsequent national lockdowns, according to Bharati, faced severe challenges and uncertainties in their supply chain network (9).
Post IPO launch
Delhivery’s supply chain services serve over 17,500 pin codes in 2,300 cities. Since its inception, it has completed over 850 million transactions and operates with over 10,000 direct clients, including large and small e-commerce players, SMEs, and leading companies and brands. The rapid spread of Covid-19 and the subsequent national lockdowns, according to Bharati, faced severe challenges and uncertainties in their supply chain network.
Delhivery, which is expected to go public this year at a valuation of 3.2 to 4 billion dollars, is reportedly planning to raise 800 million dollars through the public listing. After a slow start in 2020, the stock markets have recovered and are experiencing record-high growth levels in 2021. (10) For the IPO, the company is said to be in talks with several banks, including Kotak MahindraCapital Company, Morgan Stanley, Citi, ICICISecurities, JP Morgan, and Bank of America. “The process of appointing bankers is currently underway. According to a senior executive involved in the process, the formal launch could occur in the September or December quarter.
It claims to have completed over 850 million transactions since its inception and works with over 10,000 direct customers. After raising 413 million dollars from SoftBank and other investors, the company became a unicorn in 2019. It has received approximately 959 million dollars in funding to date from investors such as Nexus Venture Partners, Multiples, CPP Investment Board, and others. Delhivery managed to cut the losses by seven times in the fiscal year 2019 to 2020, from 1,781 crores in 2019 to 284 crores. The decrease in losses comes as the company enters a critical year. In the fiscal year 2020, the company reduced its expenses by 6 percent to 3250 crores while increasing revenue by 74 percent to 2986 crores.
As per the two people familiar with the situation, two of Delhivery’s co-founders have left the company just as it prepares for its initial public offering. Two of the five original co-founders of Delhivery, Bhavesh Manglani, and Mohit Tandon, have stepped aside from day-to-day operations. Their stake in Delhivery has also been reclassified as ‘retiring or non-active promoter.’ According to sources, this was achieved with the expectation that promoters will have a lock-in period before selling their shares after the IPO.