Sahil Barua, chief executive officer of logistics startup Delhivery Ltd, says no words about the process of going public as a historic slowdown in the technology industry.
“It was nerve-wracking,” said the 37-year-old, who is also a co-founder.
IPO Last week came only after months of discussions with potential investors and investment bankers, Baruah said in a video chat this week. Based in Gurgaon in the suburbs of New Delhi, executives visited potential backers several times to explain the company’s business model and numbers.
Barua and his team reduced the offering size by about 30% in early May and then priced the shares conservatively, essentially sacrificing some cash in the short term to avoid a downside for investors. Shares are up 10% from now delhiverywhich he feels signals a solid appetite for risk in India’s public markets, despite declining funding from venture capital firms.
“Technology stocks had corrected more than 20% in the period between the filing of our initial draft documents on our IPO, so we revised our pricing,” Baruah said. “We decided that we would rather have moderately priced shares that grow rather than list.”
The stock which started at Rs 487 closed at Rs 536 on Wednesday.
He said that the founders were not selling any shares in the company, which gave the right signal to the market. Although retail investors bid for only half of the shares that were on sale, institutional investors flocked to the stock, resulting in oversubscription.
“Retail investors find it difficult to understand why new-age technology companies are making losses,” he said.
The fall in technology stocks is resetting hopes for the venture capital ecosystem, which has become dependent on an influx of cash from privately held funds to finance money-losing operations. Delhivery — which provides last-mile delivery, warehousing and cross-border logistics support to various companies — is grabbing market share by spending its cash on buying smaller rivals. Barua said it would continue to pursue acquisitions with the proceeds of the IPO.
Delhivery’s decision to stick to its IPO plans despite the turmoil in the market could be partly due to the need to replenish its reserves. Its cash hoard fell from Rs 3.6 billion ($46 million) at the end of March 2019 to more than Rs 16 billion at the end of 2021, while total spending nearly doubled to December 2021 from nine months a year earlier . The deficit nearly tripled in the same period.
Backers of Delhivery include SoftBank Group Corp., Tiger Global LP, Carlyle Group Inc. and FedEx Corp. After a historic loss on its Vision Fund, SoftBank has said it plans to cut startup investment by 50% or more this year. Led by Tiger Global, the average monthly value of deals has also dropped by more than half from a year ago, according to PitchBook.
Established in 2011 as a food delivery service, Delhivery Xiaomi Corp. and Lenovo Group Ltd. for Warehousing, Shipment Tracking for Inditex SA’s Zara and Henes & Mouritz AB, Amazon.com Inc. and Walmart Inc. Owned by Flipkart and provides delivery for Logistics. For India’s largest automakers, equipment manufacturers and consumer goods manufacturers. The company is looking to sell its technology services to minority shareholder FedEx Corp. Planning to expand overseas by partnering with
Delhivery reported a loss in the fourth quarter of Rs 1.2 billion on revenue of Rs 20.7 billion earlier this week.
Founders Barua, Kapil Bharti and Suraj Saharan set out to create their own maps, devise ways for freelance delivery staff to handle large amounts of cash, and go beyond big cities in India’s fragmented logistics market with thousands of mom and pop logistics operators. Spent years expanding its reach.
While rising fuel prices and a shortage of skilled workers are unfavorable conditions, companies like Delhivery are betting on the scale that will help them succeed.
“Logistics is not a discretionary spend, so there is no softening of demand despite the Ukraine war and macro-economic shocks,” Baruah said. “The intersection of logistics and infrastructure is at the heart of India’s story.”