Private equity investors,
who have stayed away from investing in online retail companies, have
instead quietly reaped a windfall by backing logistics companies
providing back-end support in the ecommerce rush. In the latest deal,
Peepul Capital recorded an over six-fold return on its investment in
Ecom Express according to people aware of the transaction. Earlier this
year Multiples Alternate Asset Management also made a partial exit from
Delhivery, when the company raised fresh capital led by Tiger Global
Management.
“These kinds of returns are only possible if there is multiple re-rating of both a company and a sector, which is not very common,“ said Prakash Nene, MD at Multiples, who declined to comment on specifics of the deal.
The PE firm made a partial exit after Tiger Global led a round of about `. 542 crore in the Delhi-based firm in May.
Peepul Capital is estimated to have earned ` . 500 crore on an initial investment of ` . 80 crore in Ecom Express. The firm made an exit when the logistics firm raised fresh capital in a round led by Warburg Pincus according to two people privy to the details.
The returns have been even high er for early seed and angel investors in these two companies, which handle delivery for top online retailers like Flipkart, Amazon and Snapdeal.
According to filings with the Ministry of Corporate Affairs (MCA), seed fund Oliphans Capital bought shares in Ecom Express at around . 70 per share in 2013. The fund is es` timated to have sold some of these shares to Warburg Pincus during the investment round in June this year. Regulatory filings indicate Warburg -through its unit Eaglebay Investments -paid ` . 2,276 per share of Ecom Express; this would imply that Oliphans netted a return of over 30 times.
“It's only logical that investment is also about exits,“ said Anish Jhaveri, MD at Oliphans, declining to comment on returns made by his firm. “When we invested around $1 million in the company (Ecom Express) there were just four people in front of us who had just quit Blue Dart.“
Ecom Express was founded in 2012 by TA Krishnan, Sanjeev Saxena, K Satyanarayana and Manju Dhawan who had launched the etailing business at Blue Dart. The Delhi-based company expects to deliver goods in over 10,000 pin codes covering more than 1,500 towns and cities, across the country in the next few years.
The increasing interest in these companies is driven by the rapid growth in logistic support for online retail. A recent report on the Indian internet sector by brokerage IIFL estimates that the order volume for ecommerce shipments will increase 13x by 2020, with overall volume of ecommerce orders amounting to 2,000 tonnes per day.
Investors are of the view that just as tower companies gained in the telecom boom, the online retail rush will benefit from the back-end support companies.
“There are a lot of enablers which are important from a shadow driving perspective broadly similar to what telecom towers are to telco industry and EPC companies are to infrastructure,“ said Sreeni Vudayagiri, investment director at Peepul Capital, a PE firm with $700 million under management which primarily invests in mid-sized consumption and manufacturing businesses.
“These kinds of returns are only possible if there is multiple re-rating of both a company and a sector, which is not very common,“ said Prakash Nene, MD at Multiples, who declined to comment on specifics of the deal.
The PE firm made a partial exit after Tiger Global led a round of about `. 542 crore in the Delhi-based firm in May.
Peepul Capital is estimated to have earned ` . 500 crore on an initial investment of ` . 80 crore in Ecom Express. The firm made an exit when the logistics firm raised fresh capital in a round led by Warburg Pincus according to two people privy to the details.
The returns have been even high er for early seed and angel investors in these two companies, which handle delivery for top online retailers like Flipkart, Amazon and Snapdeal.
According to filings with the Ministry of Corporate Affairs (MCA), seed fund Oliphans Capital bought shares in Ecom Express at around . 70 per share in 2013. The fund is es` timated to have sold some of these shares to Warburg Pincus during the investment round in June this year. Regulatory filings indicate Warburg -through its unit Eaglebay Investments -paid ` . 2,276 per share of Ecom Express; this would imply that Oliphans netted a return of over 30 times.
“It's only logical that investment is also about exits,“ said Anish Jhaveri, MD at Oliphans, declining to comment on returns made by his firm. “When we invested around $1 million in the company (Ecom Express) there were just four people in front of us who had just quit Blue Dart.“
Ecom Express was founded in 2012 by TA Krishnan, Sanjeev Saxena, K Satyanarayana and Manju Dhawan who had launched the etailing business at Blue Dart. The Delhi-based company expects to deliver goods in over 10,000 pin codes covering more than 1,500 towns and cities, across the country in the next few years.
The increasing interest in these companies is driven by the rapid growth in logistic support for online retail. A recent report on the Indian internet sector by brokerage IIFL estimates that the order volume for ecommerce shipments will increase 13x by 2020, with overall volume of ecommerce orders amounting to 2,000 tonnes per day.
Investors are of the view that just as tower companies gained in the telecom boom, the online retail rush will benefit from the back-end support companies.
“There are a lot of enablers which are important from a shadow driving perspective broadly similar to what telecom towers are to telco industry and EPC companies are to infrastructure,“ said Sreeni Vudayagiri, investment director at Peepul Capital, a PE firm with $700 million under management which primarily invests in mid-sized consumption and manufacturing businesses.
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