Persistent volatility in global financial markets has made the current market situation challenging, but Delhivery Ltd’s initial public offering (IPO) will sail through as it has been priced attractively, said V Jayasankar, Whole Time Director, Kotak Mahindra Capital, who is managing Delhivery’s share sale.
“The current market situation is somewhat challenging, but we have started seeing the IPO market opening up with a couple of IPOs that got done last week,” said Jayasankar, speaking at Delhivery’s IPO press conference.
“Clearly companies that are leaders in their segments are pretty attractive. And as you look at the way investors forecast revenues, looking at the operating metrics, looking at the past numbers. This (the IPO) is very very attractively priced. Obviously as I said you will see a very good depth of domestic institutional investors foreign institutional investors and the pricing is also done based on views,” Jayasankar added.
Jayasankar added that Delhivery has an annualised revenue multiple of 4.62, which lies between the other two listed players, Bluedart and TCI Express, making the logistics and supply chain startup an attractive bet for investors as Delhivery is growing at a much faster rate than its peers.
Impact of volatile financial markets
Jayasankar’s comments come at a time when the logistics company is all set to launch its IPO next week. Delhivery will become the first new-age technology startup to launch its IPO in 2022. While the logistics company had filed its draft papers last November and had received Sebi approval in January this year, it had pushed back its listing plans due to volatility in financial markets globally. Moneycontrol had reported this exclusively.
To be sure, Delhivery is not the only new-age technology company to have delayed its listing plans. Oyo, Pharmeasy, Ola, Byju’s and Snapdeal, among others, have also pushed back their listing plans owing to the volatility in global financial markets due to rising inflation, tightening interest rates and geo-political tensions. Moreover, the hammering that some new-age technology companies received in the stock markets after they went public last year has also led to these companies to push back their listing plans.
While Delhivery will become the first new-age tech startup to go public in 2022, it has reduced its total issue size to Rs 5,235 crore from the Rs 7,460 crore planned earlier. It will now raise Rs 4,000 crore via the fresh issue and Rs 1,235 crore through an offer for sale (OFS).
“The secondary share sale was supposed to be about Rs 2,500 crore; that probably got reduced by 50%, because the existing shareholders felt that their valuation was quite attractive and believed that they would prefer to be longer-term shareholders,” said Jayasankar, explaining the rationale behind Delhivery cutting its overall issue size.
“And the primary shares got reduced to Rs 4,000 crore from Rs 5,000 crore primarily because the company had Rs 2,900 crore of cash as of December and believed that Rs 4,000 crore of money is more than adequate to that kitty of Rs 2,900 crore for all the consolidation opportunities and opportunities both organic and inorganic,” Jayasankar added.
IPO details
The company has set the price band of its initial public offering (IPO) at Rs 462-487 a share, valuing it at Rs 35,283 crore at the top end of the band. Delhivery said its IPO will open for subscription on May 11 and close on May 13. The basis for allotment will be on May 19 and the shares will be credited to the demat account on May 23. The firm will list on exchanges on May 24.
Fosun group-owned China Momentum Fund, via its affiliate Deli CMF Pte Ltd, will sell up to Rs 200 crore. The OFS will comprise up to Rs 454 crore by CA Swift Investments, up to Rs 365 crore by SVF Doorbell Ltd, and up to Rs 165 crore by Times Internet.
Delhivery’s co-founders will also participate in the OFS. Kapil Bharati will sell shares worth Rs 5 crore, Mohit Tandon will sell shares worth Rs 40 crore and Suraj Saharan is selling up to Rs 6 crore worth of shares.
The proceeds from the issue will fund the company's organic and inorganic growth initiatives via acquisitions and other strategies.
Kotak Mahindra Capital, Morgan Stanley India, Bofa Securities India, and Citigroup Global Markets are managing the share sale.
Delhivery is the largest fully integrated logistics services player in India by revenue. It has built a nationwide network in every state, servicing 17,045 PIN codes or 88.3 percent of the 19,300 PIN codes in India. The Gurugram-based firm became a unicorn in 2019 when it raised $413 million in a Series F round led by SoftBank Vision Fund.
Earlier today, Moneycontrol reported that shares of the company had plummeted nearly 40% in the unlisted market to Rs 550-600 from the peak of Rs 950 apiece in January.
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