Logistics start-up Delhivery is one of the firms that will launch its initial public offering (IPO) to raise ₹5,235 crore after the mega LIC IPO. The issue will open for subscription on May 11 and the price band for the same has been decided between ₹462-487 per share.
The IPO, which will close on May 13, will be the second-biggest IPO of 2022 after LIC. The bidding for anchor investors will open on May 10.
Valuation: At the upper end of the price band, the company is valued at ₹35,284 crore, Delhivery announced in a virtual press conference.
About the IPO: The size of the IPO has been cut to ₹5,235 crore from ₹7,460 crore earlier planned. The issue now comprises fresh issuance of shares worth ₹4,000 crore and an Offer for Sale (OFS) of ₹1,235 crore by shareholders Carlyle, Softbank and Delivery promoters.
Under the OFS component, CA Swift Investments, an entity of Carlyle Group, will sell shares worth ₹454 crore while SVF Doorbell (Cayman), an arm of Softbank Group, will offload shares worth ₹365 crore in the logistics startup.
Apart from them, China Momentum Fund will sell shares worth ₹200 crore and Times Internet will offload shares worth ₹165 crore. In addition, Delhivery's co-founders Kapil Bharati, Mohit Tandon and Suraj Saharan will also sell shares in the tune of ₹5 crore, ₹40 crore and ₹6 crore, respectively.
Shareholding: Currently, SoftBank holds a 22.78 percent stake, Carlyle owns 7.42 percent, Bharti 1.11 percent, Tondon 1.88 percent and Saharan 1.79 percent equity in the logistics firm.
Objective: As per the DRHP, proceeds of the fresh issue worth ₹2,000 crore will be used towards funding organic growth initiatives and ₹1,000 crore for inorganic growth through acquisitions and other strategic initiatives, besides, money will be used for general corporate purposes.
Reservation: The company said that 75 percent of the issue has been reserved for qualified institutional investors, 15 percent for non-institutional investors and the remaining 10 percent for retail investors. In addition, the company has set aside shares worth ₹20 crore for eligible employees, who will get a discount of ₹5 per equity stock during the bidding process.
Bid: Investors can bid for a minimum of 30 equity shares and in multiples thereof. At the upper end of the price band, one set of shares will cost an investor ₹14,610.
Lead managers: Kotak Mahindra Capital Company, BofA Securities India, Morgan Stanley India Company and Citigroup Global Markets India are the book running lead managers for the issue.
Listing: The equity shares will be listed on the stock exchanges - BSE and NSE on May 24.
About the Firm: Delhivery provides a full range of logistics services, including express parcel delivery, heavy goods delivery, warehousing, supply chain solutions, cross-border express and freight services and supply chain software, along with value-added services such as e-commerce return services, payment collection and processing, installation and assembly services. It operates a pan-India network and provides services in 17,045 PIN codes. The Gurugram-based firm became a unicorn in 2019 when it raised $413 million in a Series F round led by SoftBank Vision Fund.
Financials: According to its DRHP, the company is India’s largest and fastest-growing fully integrated logistics player by revenue as on FY21. The firm’s revenues have grown from ₹1,654 crore in FY19 to ₹3,646 crore in FY21 at a CAGR of 48.5 percent. Delhivery has seen an improvement in adjusted EBITDA margin from -11.35 percent in FY19 to -6.95 percent in FY21.
Brokerage View: Motilal Oswal had said the domestic logistics sector offers a large addressable opportunity as it is pegged to grow at an annualised rate of 9 percent to $365 billion between FY20 and FY26. The domestic brokerage expects organised players to clock higher growth due to their focus on technology and automation.
As per market experts, Delhivery’s IPO will re-evaluate investors’ appetite for startups after last year's fiasco with Paytm and Zomato. During a press briefing on Thursday, the company said it has been able to improve its operating profitability despite continued investments in building capabilities and rapidly growing its top line.
Unlisted market: Shares of logistics and supply-chain startup Delhivery Ltd are down nearly 40 percent in the unlisted market from the peak of ₹950 apiece in January ahead of its initial public offering (IPO). The stock is quoting at ₹550-600 per share on thin trading volume, as per a Moneycontrol report. The sharp fall, as well as the price band, has unsettled investors who acquired stock from the unlisted market, the report added.