Home/Blogs/Ecom Express secures board approval for Rs 2,600 Crore IPO

Ecom Express secures board approval for Rs 2,600 Crore IPO

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Published Date: 16 Aug 2024Updated Date: 31 Dec 20246 mins readBy MOFSL

Ecom Express, one of India’s leading logistics startups, is gearing up for its much-anticipated initial public offering (IPO). Founded in 2012 by the late TA Krishnan, along with co-founders Manju Dhawan, K Satyanarayana, and Sanjeev Saxena, the company has grown from a mere logistics company to a company, now operating out of 3,000 delivery centres across 9.6 million square feet of space, and servicing 27,000 pin codes in more than 2,500 cities and towns across India. The decision to go public comes after a solidified discussion during an extraordinary general meeting (EGM) held on August 13, wherein the company board approved the IPO plans, marking a significant milestone in its growth trajectory.

Ecom Express’s renewed push to enter the stock market aligns with the broader trend of new-age companies capturing investor attention in India’s public markets. This trend has seen notable success, with recent IPOs from SoftBank-backed companies like Ola Electric, FirstCry, and Unicommerce, each experiencing significant gains post-listing. The logistics sector, in particular, has seen heightened interest as the rapid growth of e-commerce continues to fuel demand for efficient delivery solutions.

Ecom Express plans to raise INR 2,600 crore through its IPO. The offering will consist of a fresh issue of shares worth up to INR 1,284.5 crore and an offer for sale valued at up to INR 1,315.5 crore. The shares are expected to be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), with the company also planning to raise INR 256.9 crore through a pre-IPO placement. While the exact timeline for the IPO remains to be finalised, Ecom Express is closely working with book-running lead managers and advisors, including Kotak Capital, IIFL, Axis Capital, and UBS, to determine the optimal time for listing.

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In addition to its IPO plans, Ecom Express is in advanced discussions with existing investors—Warburg Pincus, CDC Group, and Partners Group—to raise an additional INR 350-400 crore, which could elevate its valuation to unicorn status. Partners Group is set to sell shares amounting to up to Rs 931 crore, while Warburg Pincus and BII (formerly CDC Group) will offload shares worth Rs 211 crore and Rs 137 crore, respectively, during the offer for sale. At the time of this filing, Partners Group holds the largest stake at 49.76%, followed by Warburg Pincus with 27.13% and BII with 10.03%.To date, Ecom Express has secured over $250 million in funding through a mix of equity and debt, a testament to the strong investor confidence in its business model and growth prospects.

The company recently received board approval to raise INR 1,424 crore through a rights issue, led by its existing investors, further bolstering its financial position ahead of the IPO. This marks Ecom Express’s second attempt to go public; in February 2022, the company had initially approved plans to raise up to INR 4,860 crore through a public issue of shares but ultimately decided to delay the IPO due to market conditions.

Ecom Express’s impending IPO will position it as the second Indian logistics startup to list on the stock exchange, following its competitor Delhivery, which made its public debut in May 2022. Delhivery is currently valued at approximately $3.6 billion, underscoring the significant market potential for logistics firms in India. The sector is highly competitive, with Ecom Express also facing competition from players like XpressBees, Flipkart-owned Ekart Logistics, and Amazon Transportation Services.

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Ecom Express’s business model primarily revolves around handling e-commerce shipments for online marketplaces and consumer brands, including prominent names like Decathlon, CaratLane, and FabIndia. In addition, the company services the Prosus-backed e-commerce platform Meesho, which recently launched its own logistics arm, Valmo. The emergence of Valmo is being closely watched by industry analysts, who suggest that its growth could pose a challenge to third-party logistics providers like Ecom Express, which have traditionally relied heavily on volumes from large online retailers.

As Ecom Express prepares for its public listing, the company’s strategic decisions and market positioning will be crucial in navigating the challenges and opportunities within India’s dynamic logistics landscape. The success of its IPO will not only reflect the confidence of investors in the company’s future but also signal the broader market’s appetite for investments in the rapidly evolving logistics sector.

 

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