Delhivery IPO oversubscribed by 1.63 times

The strong support from institutional investors saw the IPO of Delhivery sail through on the final day, even as HNIs and retail categories saw a tepid response.
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The initial public offering (IPO) of the technology driven logistics company Delhivery sailed through on the final day of the bidding process, with institutional investors giving it the much-needed boost.

Delhivery had priced its IPO in the range of Rs 462-487 per share to raise Rs 5,235 crore which opened for bidding on May 11 as part of the three-day process. On the final day, i.e, May 13, it received bids for 101.6 million shares against 62.5 million on offer, according to information available on the BSE.

The institutional investors dominated the bidding process, with the QIB (Qualified Institutional Buyers) portion oversubscribed 2.66X. This resulted in a subscription of 90 million shares against the allotment of 33.8 million.

However, the IPO of Delhivery faced certain challenges from the non-institutional investors, ie, the HNIs (high net-worth individuals), retail investors, and the employee categories as these segments were not fully subscribed at the close of the bidding.

The HNI category bid for just 30 percent of shares allocated to them, while this number was a mere 57 percent in the retail segment, and 27 percent for the employee category.

At the closing of the bidding process, Delhivery IPO was oversubscribed 1.63 times

The public issue of Delhivery comprised fresh issue of up to Rs 4,000 crore and an offer for sale (OFS) of up to Rs 1,235 crore. Under the OFS, investors Carlyle Group, Softbank and the co-founders of Delhivery divested part of their stake.

Delhivery has already raised Rs 2,347 crore from 64 anchor investors who were allocated 48 million shares at a price of Rs 487 per share. These investors included the likes of Tiger Global, Bay Capital, Steadview, Fidelity, Baillie Gifford, Schroders, and Aberdeen Standard Life, among others. The domestic investors participating included the mutual funds of banks including SBI, HDFC, ICICI, etc.

Delhivery plans to use the IPO proceeds for growth initiatives, which include both organic and inorganic routes. It reported a revenue of Rs 4,911 crore for the nine months ending December 2021, with a loss of Rs 891.14 crore.

The Delhivery IPO comes at a very challenging time for the logistics provider as the macro-economic conditions have taken a turn for the worst. Central banks across the world have resorted to increasing interest rates to combat the rising inflation, which has curbed the liquidity flow and led to bearish stock markets.

The impact has been felt in the Indian startup ecosystem as well as five leading Indian startups — Paytm, Nykaa, Policybazaar, Zomato, and Freshworks — which had gone public last year, have also seen the value of their shares declining. Except for Nykaa, share prices of all the companies are trading below the issue price.

Edited by Kanishk Singh

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