Technology-enabled logistics businesses are expected to emerge as the
next big market, growing from $1.4 billion in 2015 to $9.6 billion by
2020, according to a report by investment bank Avendus Capital.
BENGALURU:
Carlyle Asia Partners IV (CAP IV) has led a
$100 million (Rs 655 crore approx) funding round for
e-commerce logistics company
Delhivery for a significant minority
stake in the company, reaffirming interests from bulge PE bracket
buyout funds who have traditionally stayed away from the domestic
consumer internet space.
Existing investor
Tiger Global also participated
in the round which values the company at close $700 million (Rs 4700
crore).
Betting on the growing demand from the Indian
e-commerce industry and requirement for specialised Service level
Agreements (SLA) from logistics partners, this will be CAP’s first big
logistics bet in the e-commerce space in India. CAP is also an
investor in ANE Technologies in China, and Carlyle Group-backed China
Logistics Property Holdings Co launched an IPO in HongKong in August
2016.
Carlyle&s investment in Delhivery will be among the
largest PE investment in the space. In July 2015, Warburg Pincus had
agreed to invest $133 million in Ecom Express. “In India, 70% of the
e-commerce market is mobile and electronics. If you look at markets
worldwide, categories like apparel, home decor, grocery, furniture
form a larger
share in a mature market. We believe these
categories will grow in India, accelerating the need for third-party
logistics players. The horizontal players will continue to be the
largest players while categories like grocery and furniture will see
the emergence of vertical players,” said Neeraj Bharadwaj, managing
director at Carlyle Group, India.
He added that the group decided to invest in the company based on the
scale, technology and its data sciences and analytics capabilities.
Delhivery which began as hyperlocal food delivery startup in Gurugram
soon pivoted to became an e-commerce logistics company, ridding
piggyback on the online retail boom.
It currently services
600 cities and 8500 pin codes through its logistics network. The
company also has a network of 12 fulfilment centres and works with
companies like Flipkart and
Paytm. For the financial year ending
March 2016, the losses of Delhivery were at Rs 317 crore as compared
to Rs 71 crore in FY 2014-15 as sourced by data research platform
Tofler while the revenues grew to Rs 495 crore during the same period
over Rs 228 crore in the previous year, FY 2015-16.
The
company had previously raised $85 million from Tiger Global,Nexus Venture Partners , Multiples Alternate Asset Management
and Times Internet Ltd in May 2015. Multiples Alternate Asset Management later sold part of its
stake to Tiger Global. ET in its edition dated February 28 was the
first to report about Carlyle closing in on the investment. Delhivery
founded in 2011 has gone on record to say that the company is on the
path to profitability in an interview given to ET in October. “We are
profitable and it will reflect in our results for fiscal 2018,” said
Sahil Barua, co-founder of the company.
According to experts tracking the sector, close to 1.4 to 1.5 million
packages from e-commerce companies are processed daily in India. “This
is a fraction of the China delivery market where close to 75-80
million packages are shipped daily.
As an investor in ANE
Technologies, we will share our learning in express deliveries and LTL
(less than load, implying small freight) with the company,” added
Bharadwaj. While Goods and Services Tax will see a consolidation of
warehouses and the transport sector, it will be a good opportunity for
Delhivery to increase scale, said Bharadwaj. “I don&t think
acquisition is necessary to build scale.
As GST comes along and there is consolidation in the market, we as a
larger player will absorb some of the business,” said Bharadwaj.
Previously Delhivery had invested in last mile food delivery company
Opinio which was acquired by
Curefit earlier this year as well as
first-mile pickup service provider
Parcelled which rolled back operations.
Technology-enabled logistics businesses are expected to
emerge as the next big market, growing from $1.4 billion in 2015 to
$9.6 billion by 2020, according to a report by investment bank
Avendus Capital. CAP under Bharadwaj has also become a proactive PE investor having
backed Metropolis, PNB Housing Finance, Medanta, in the last 3
years.
As of December 31, 2016, the group has invested
approximately $1.4 billion of equity in more than 30 transactions in
India across all funds.
According to industry sources, it has invested the highest amount in
2015 in a single year since setting up its India operations in 2000.
Founded in 1987 in Washington, DC, Carlyle – the world&s 2nd largest
PE fund — manages $183 billion worth of assets, according to its
website. Roughly one-third of those assets are managed by its
private-equity team. Last year, the firm had ranked India as the most
attractive investment destination in the whole world, offering the
highest expected returns on incremental capital over the next 4 years.