Livemint: July 04, 2016
New Delhi: Mumbai-based Grab a Grub Services Pvt. Ltd that runs hyperlocal logistics service Grab has raised debt from United Arab Emirates-based logistics firm Aramex Ventures Llc, a top executive said.
“We are excited to partner with Aramex. The funding will be used to enhance our technology and roll out newer service verticals over the next year,” said Nishant Vora, co-founder of Grab in an email.
While the company did not disclose the size of the deal, documents with the registrar of companies (RoC) show Grab has raised Rs.13.34 crore in debt from logistics firm Aramex Ventures in the first tranche. Grab will raise two more tranches from Aramex for almost 25% of the total paid-up share capital on a fully diluted basis, according to the documents.
“Aramex CCD refers to 200,040 compulsory convertible debentures to be converted into 11,753 equity shares, out of which Aramex has already subscribed to Aramex Tranche I CCDs and the balance (Aramex Tranche II CCDs and Aramex Tranche III CCDs) shall be subscribed by Aramex in next two tranches,” said the RoC document.
Vora confirmed that Aramex has made a tranche-based structured investment with follow-on rounds to happen in the subsequent year. “Upon conversion of the Aramex CCDs, Aramex shall be entitled to hold 24.53% of the total paid-up share capital on a fully diluted basis,” the document added.
Aramex did not immediately respond to an email.
In August, Mint reported that Grab was in talks to raise $10 million . Grab provides intra-city logistics services to enterprises such as restaurants, food tech platforms, groceries, e-commerce platforms and banks. It works with over 1,000 merchants across 10 cities, according to its website. It is also planning to enter peer-to-peer delivery and reverse logistics.
The Mumbai-based company was founded in 2012 by Jignesh Patel, Nishant Vora and Pratish Sanghvi. Its clients include Snapdeal, Zomato, McDonalds, Big Bazaar, RBL Bank, Pantaloons, Faasos, Pizza Hut, etc. It provides services ranging from on-demand, reverse deliveries, first-mile and last-mile management.
Aramex joins the list of Grab’s investors including Zomato, Sixth Sense Ventures, Oliphans Capital, and Haresh Chawla. Zomato bought a minority stake in Grab in September.
The latest infusion of funds gives Grab an upper hand against its competitors such as Shadowfax and Opinio. Shadowfax Technologies Pvt. Ltd last announced a fund raise of $8.5 million from Fidelity’s proprietary investment arm, Eight Roads Ventures in September.
Opinio (Moonshots Internet Pvt. Ltd) raised $7 million in its Series A funding from logistics company SSN Logistics Pvt. Ltd-run Delhivery, Sands Capital and Accel Partners in October. The move comes at a time when the hyperlocal delivery space is struggling to improve its unit economics and reduce cash burn.
Of late, the sector has been affected by investors skewed about writing larger cheques in the sector. Consumer-facing start-ups in the hyperlocal space have been the worst affected.
Food delivery start-up Dazo shut shop last year and TinyOwl got acquired by hyperlocal delivey firm Roadrunnr (Carthero Technologies Pvt. Ltd). PepperTap shut its hyperlocal business while Grofers shut operations in smaller cities. Grofers will also lay off 10% of its workforce after it revoked job offers to fresh graduates, citing adverse market conditions last week.
According to Tracxn, a start-up data tracker, at least 27 hyperlocal business-to-business delivery start-ups have been founded in India since January last year. The sector has witnessed about $38 million in investments so far.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.