delhivery ipo: Delhivery to double down on organic and inorganic expansion after IPO

Bangalore: New-age logistics startup Delhivery, whose initial public offering (IPO) will open for membership on May 11, will continue doubling down on expansion through organic and inorganic investments in India, according to its executive director and chief business officer Sandeep Barsia. He added that it also sees overseas markets as an opportunity for growth.

The IPO subscription window of SoftBank and Carlyle-backed Delhivery will close on May 13. The company has fixed a price band of Rs 462-487 per share, it was announced at a press conference on Thursday.

“We have a huge addressable market as I have talked about many times. We will continue to double the addressable market. Today on revenue of Rs 5,000 crore for the first nine months of FY 2012, we still have That’s less than half a percent of the $300 billion market opportunity,” he said at the press conference.

Barsia, who joined Delhi seven years ago, said the logistics industry is highly fragmented and one cannot expect smaller companies to reinvent themselves.

“(Our) M&A philosophy is about looking at businesses that will add immediate scale to the company in one of our core businesses or add specific capability to the business we want to build,” he said. “That’s what we’ve done in the past. For example, Spotton added a huge amount of scale to the part truckload business very quickly and put us in the number two position in the market.

Delhivery acquired Spoton last August in a cash transaction of $300 million. Since its plans to go public were made official, it has made several acquisitions, including drone startup Transition Robotics.

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Barsai said Delhivery would be interested in meaningful majority investment and M&A rather than minority investment.

“Partnerships with FedEx, a global integrator, and our investment in Falcon Autotech … show that we have the appetite and ability to drive consolidation in the market. We will continue to use this as a growth pillar,” he said.

Of the Rs 5,235 crore offer, Rs 4,000 crore would be through primary share sale, while the remaining Rs 1,235 crore would be through an offer for sale (OFS). In OFS, existing investors sell a part of their stake to new investors and the money does not go to the company.

In Delhivery’s OFS, investors like Fosan will sell shares worth Rs 200 crore, while SoftBank and Carlyle will sell stake worth Rs 365 crore and Rs 454 crore, respectively. Times Internet, which owns ETtech, is also selling shares worth Rs 165 crore in OFS.

It plans to use Rs 2,000 crore from the IPO for organic expansion and Rs 1,000 crore for inorganic growth through acquisitions and other strategic initiatives. The remaining proceeds will be for general corporate purposes, it said.

As reported earlier by ET, Delhivery had originally planned an IPO of Rs 7,460 crore, but cut the size due to market conditions.

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