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Home / Markets / Ipo /  Delhivery’s road to a potential $1 billion IPO

A decade ago, Sahil Barua, Mohit Tandon and Suraj Saharan quit their lucrative jobs at Bain & Co. to pursue their dream of setting up a third-party logistics company. They also managed to persuade Bhavesh Manglani, who worked at Reliance Industries, and Kapil Bharati who had founded two companies, to join them.

On 5 April 2011, they saw their dream take shape with the launch of SSN Logistics, the parent of Delhivery, with an authorized share capital of 1 lakh.

It wasn’t a smooth journey. The founders had to pool in funds from their own pockets to keep the firm going in the first year, following which angel investor Abhishek Goyal of Traxcn “put in 50-60 lakh, which kept us going for 12 months or so", recalled Barua, CEO and MD of Delhivery, in an interview to VCCircle in 2015.

After a slew of funding from marquee investors such as Carlyle, SoftBank and FedEx, the founders are now sitting on a windfall, with Delhivery poised to float its initial public offering to raise up to 7,460 crore at a valuation of $5.5 billion.

Barua alone has a stake worth 1,296 crore, according to the draft red herring prospectus (DRHP) filed with the Securities and Exchange Board of India last week. Together, the four founders (Barua, Saharan, Tandon and Bharati) own a total stake worth 3,176.7 crore. Manglani had quit in December 2020.

To be sure, not all the founders intend to sell their stakes in the upcoming IPO that comprises a fresh issue of 5,000 crore and an offer for sale (OFS) of up to 2,460 crore by existing promoters and shareholders.

Barua will not participate in the OFS round. On the other hand, Tandon who has a 1.88% stake in the firm, has offered to sell shares worth 40 crore; and Saharan, who holds 1.24%, has proposed to offload stake worth 6 crore.

Bharati, the company’s chief technology officer, owns 1.11% and has offered to sell shares worth 14 crore during the public float.

Like many startups, the journey for Delhivery wasn’t easy. In the above-cited interview, Barua recalled that one of the biggest challenges was to convince investors that a third-party player could be created and there was space for an e-commerce enablement business. Eight months into the business, apart from the five founders, Delhivery had just one person in the call centre, one tech expert, and all of 30 “field folk", Barua said, underlining the difficulty in attracting people.

As of June, Delhivery had 12,665 permanent employees and 27,313 contract workers, according to the DRHP. It also hires temporary workers for last-mile delivery services; it had 26,370 last-mile delivery agents in June. Besides, it boasts of 21 automated sort centres, 71 fulfilment centres, 2,235 self-managed centres and over 1,100 constellation partner centres to be counted among India’s largest logistics players.

According to Barua, automation played a key role in differentiating Delhivery from traditional courier service.

“Technology is the core of what we do... all the way from the order management systems to the warehousing, to locating inventory, all of this is carried by our in-house technology," he had said.

Delivery’s growth was also propelled by the enormous funding from venture capital and private equity investors. The Gurugram-based company turned a unicorn in 2019 after raising $395 million in a Series F round led by SoftBank at a valuation of around $1.5 billion.

Delhivery has also been quite active on the inorganic growth; its biggest acquisition made this year was when it bought Spoton Logistics Pvt. Ltd.

nikhil.patwardhan@livemint.com

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