New Delhi: Logistics firm Delhivery’s Chief Executive Officer (CEO) Sahil Barua minces no words about the process regarding the initial public offering (IPO) in what’s shaping up to be an historic meltdown in the technology industry.
In a Bloomberg report, Barua (37), who leads Delhivery and also a co-founder, said, “It was nerve-wracking.”
He said that only after months of discussions with potential investors and multiple investment bankers the company launched the IPO last week. Executives paid several visits to would-be backers to explain the business models and numbers at the company’s office, located in Gurugram and New Delhi.
The size of offering of the Delhivery IPO was slashed by about 30 per cent at the beginning of May. The team decided to price shares conservatively, essentially sacrificing some cash in the short-term to try to avoid a tumble for investors.
Shares are now up 10 per cent from Delhivery’s debut, which he thinks signals solid appetite for risk in India’s public markets despite a drop in financing from venture capital firms.
“Technology stocks had corrected more than 20 per cent in the period between filing our initial draft documents to our IPO so we modified our pricing,” Barua said. “We decided we’d rather have modestly-priced shares which rise rather than tumble on listing.”
He said that the founders weren’t selling any shares in the company sent the right signal to the market. Although retail investors bid for only about half the shares that were on sale, institutional investors flocked to the stock, resulting in an oversubscription.
“Retail investors have a hard time understanding why new-age technology companies make losses,” he said.
According to the report, a rout in technology stocks is resetting expectations for the venture capital ecosystem, which has grown dependent on a flood of cash from privately held funds to finance money-losing operations.
Delhivery, which provides last-mile delivery, warehousing, and cross-border logistics support to a variety of firms, has been grabbing market share by spending its cash on buying smaller rivals. It’ll continue to chase acquisitions with the proceeds of the IPO, Barua said.
The prime investors of Delhivery include SoftBank Group Corp., Tiger Global LP, the Carlyle Group Inc, and FedEx Corp.
Founded in 2011 as a food delivery service, Delhivery provides warehousing for Xiaomi Corp and Lenovo Group Ltd., shipment tracking for Inditex SA’s Zara and Hennes & Mauritz AB, deliveries for Amazon.com, and Walmart Inc.-owned Flipkart and logistics for India’s largest automakers, appliance manufacturers, and consumer goods makers.
The company plans to expand overseas by partnering minority shareholder FedEx Corp. to sell its technology services.
Delhivery posted a fourth quarter loss of Rs 200 crore on revenue of Rs 2,070 crore earlier this week.
On Thursday at 11.30 am, the shares of Delhivery were trading at Rs 554.30, up 3.41 per cent on the BSE.