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Warburg Pincus-backed Ecom Express said to raise $150 million

LiveMint logoLiveMint 08-03-2017 Swaraj Singh Dhanjal

Mumbai: E-commerce-focused logistics firm Ecom Express has initiated the process of raising at least $75 million in a new round of funding, two people aware of the development said.

“They (Ecom Express) have recently launched the process to raise a new round of funding. The process is at an initial stage right now and the fund-raise is expected to close only by the second half of the year,” said the first of the two people cited above, who spoke on condition of anonymity.

Ecom Express’s existing private equity investor Warburg Pincus is likely to bring in another $75 million, which could take the fund-raising to a total of $150 million, he added.

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A spokesperson for Ecom Express declined to comment. Emails sent to Warburg Pincus went unanswered.

Ecom Express and Delhivery, besides Flipkart-owned Ekart, are among the largest delivery firms focused on e-commerce in India.

In June 2015, Warburg Pincus invested Rs850 crore in Ecom Express.

A month earlier, Tiger Global Management had infused Rs542 crore in rival Delhivery.

Based in Delhi, Ecom Express was founded in 2012 by T.A. Krishnan, Manju Dhawan, K. Satyanarayana and Sanjeev Saxena.

According to the second of the two persons cited above, the money will be used mainly to expand into the fulfilment services business.

The firm, which until now only handled last-mile deliveries, has recently started fulfilment services, which entails receiving, packaging and shipping products ordered by customers.

Last month, Mint reported that the logistics firm has started fulfilment services, with the opening of three new warehouse facilities in Gurgaon, Bengaluru and Lucknow.

As part of this new line of business, these facilities will offer inventory management, order processing, packaging and dispatch services.

Ecom Express plans to open at least seven big and 20 small warehouses, Mint reported.

Two large warehouses are expected to come up in Mumbai and Bengaluru by the end of this calendar year.

Ecom Express delivers to 11,000 pin codes across the country. It operates about 1,200 delivery centres (800-1,500 sq. ft each) and 33 transit hubs (5,000-30,000 sq. ft each), according to the company’s website. Delhivery, Ecom Express’s biggest competitor, operates 11 fulfilment centres across the country.

Last week, The Economic Times reported that Delhivery is in advanced talks with private equity firm Carlyle Group and Chinese conglomerate Fosun to raise a new round of funding of around $100 million. The transaction could value the Delhi-based logistics firm at close to $700 million, the newspaper reported.

Ecom Express’ biggest investor, Warburg Pincus, has made several large bets in logistics.

In November, it invested $75 million (Rs500 crore) in Gurgaon-based logistics services provider Rivigo for a minority stake.

Rivigo provides logistics services solutions to companies in sectors such as e-commerce, consumer goods, automotive, retail and pharmaceuticals.

Earlier in 2015, the private equity fund had entered into a $250-million joint venture with real estate developer Embassy Group to build warehouses across the country.

Another Warburg portfolio firm Continental Warehousing Corp. (Nhava Sheva) Ltd filed its share-sale prospectus in September and is expected to launch its initial public offering (IPO) soon. Warburg had invested $100 million in the company in 2011.

According to Sanjay Sethi, managing director and chief executive at infrastructure advisory firm Nestor Consulting India, factors such as the impending implementation of the goods and services tax (GST) makes logistics businesses attractive, despite the recent headwinds in the e-commerce industry.

“GST, which is a few months away, will result in a significant shift in the way logistics business is managed in the country. The logic of setting up warehouses for tax efficiency will change and people will set up mega storage spaces close to consumption markets, which will drive demand for funds,” he said.

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