Delhivery IPO - 7 Things to Know
Delhivery Ltd has been one of the first digital plays to get approval for its IPO in the current calendar year 2022. The company is focused on digital logistics and delivery across India largely leveraging digital sourcing and monitoring. It also provides logistic support services.
1) Delhivery Ltd has been approved by SEBI for a Rs7,460 crore IPO which comprises of a fresh issue of Rs.5,000 crore and an offer for sale component of Rs.2,460 crore in the issue. The IPO draft red herring prospectus (DRHP) had been filed in November 2021 and SEBI had given its observations in Jan-22, which his tantamount to regulatory approval.
2) Two of its key early investors viz. Carlyle PE Fund and Softbank of Japan will participate and take partial exit from Delhivery in the OFS portion of the IPO. In addition, Times Internet (a unit of Bennett Coleman) and Tiger Global will also take a partial exit from the company via the IPO. Some of the promoters also plan to participate in the OFS.
3) Delhivery has had over 5 rounds of venture funding till date. Its first round of funding in the year 2012 was at a valuation of Rs.20 crore overall. Its last round of funding in March 2019 had valued the company at Rs.11,000 crore or $1.5 billion. Its valuation in the 2022 IPO is pegged at $6 billion or Rs.45,000 crore. That is a 2,000X appreciation in 10 years.
4) For the time being, the Delhivery IPO has been kept on hold by the investment bankers as most of the digital IPOs in the market have taken a sharp hit. Recent digital IPO listings like Paytm, Nykaa, CarTrade PB Fintech and Zomato have all taken cuts in the range of 30% to 55% from their recent high prices. That has forced a delay in the IPO.
5) For FY21, Delhivery had reported total revenues of Rs.3,647 crore while its net loss had widened to Rs.416 crore. Like most of the digital enablers, Delhivery also has a lot of costs front-ended which is what has delayed profits. Turnaround to profits would still be a couple of years away for the company which is investing heavily in marketing, distribution logistics and branding.
6) The fresh issue component will be used to bankroll some of the company’s organic expansion plans and inorganic growth plans in the near future. On the inorganic front, Delhivery has recently made strategic investments in Spoton Logistics and Falcon Autotech in the area of warehousing logistics. Funds will also be used to repay debt.
7) Delhivery currently has more than 21,000 customers which includes e-commerce players, direct to home companies etc. It also covers over 17,000 PIN codes in India and plans to further expand its outreach post the issue.
The issue is being lead managed by Kotak Mahindra Capital, Morgan Stanley, BOFA Securities and Citigroup Global. They will also act as the book running lead manages (BRLMs) for the IPO.
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