The Economic Times: May, 2014
New Delhi: E-commerce logistics services company Delhivery is in the final stages of negotiations to raise up to Rs 175 crore in fresh funding, a development that comes at a time when a number of India's top private equity funds are betting big on the country's digital commerce sector.
The company has had discussions with a number of blue-chip private equity firms, a list that also includes marquee growth-stage risk capital investor Warburg Pincus, and a deal is expected to be finalized by mid-June, according to sources with direct knowledge of the talks.
If successful, this will be Delhivery's third round of equity funding. In September last year, it raised about Rs 35 crore from Nexus Venture Partners, having raised an undisclosed sum from Times Internet Limited earlier in 2012.The existing venture capital backers are also expected to participate in the new round.
Warburg Pincus recently made the news when it led an Rs 550 crore round of funding in online and mobile classifieds company Quikr in March. Avendus Capital, a leading investment bank, has been given the mandate to structure the transaction.
While Sahil Barua, co-founder of Delhivery, and War burg Pincus refused to comment, emails sent to Avendus Capital did not elicit any response.
A potential transaction could value Delhivery at over Rs 500 crore.
A number of India's top private equity firms with a consumer-facing business focus, but are yet to invest in e-commerce have highlighted their interest in investing in companies that provide services such as payments, logistics, reverse logistics, packaging and supply chain management.
"We don't have a preference for businesses that focus on core merchandising. We would rather look at logistics and payment-related businesses, which go right across the space, "said Akhil Awasthi, managing partner, Tata Capital Growth Fund.
The shift in strategy has largely been driven by the relatively lower valuations and smaller amounts of capital required by ancillary service providers, with average deal sizes of Rs 50 crore to Rs 150 crore.
"We will consider investments in e-commerce. We haven't so far, because a number of those businesses are yet to mature to a point where we, as a late stage investor, are comfortable investing in them. BillDesk, where we have invested, is a classic example of a company that has been a direct beneficiary of what's happening in the broader consumer internet space, "said Dhiraj Poddar, India head of global private equity firm TA Associates.
Additionally , the country's top e-commerce companies, which also includes global retailing giant Amazon, have stepped up their lobbying efforts to allow foreign direct investment in e-commerce, which, so far, is restricted to business-business e-commerce.
Delhivery, which counts almost every e-commerce venture among its clientele, including, Snapdeal, Flipkart and Rediff, has a monthly revenue run-rate of Rs 12 crore. Founded by a group of IIM and IIT alumni, the company currently ships more than 51,000 orders per day, to 150 cities across the country.
In June 2013, it acquired the cash collection services and brand name of Hyderabad-based startup Gharpay Technology Services for an undisclosed sum.