Gurugram-based Ecom Express to raise $170 million via rights issue, plans to launch IPO

Gurugram-based third-party logistics company Ecom Express is set to raise Rs 1,424 crore or approximately $170 million through a rights issue.

The company’s board has approved a resolution to issue 1.57 million compulsorily convertible preference shares (CCPS) at Rs 9,071 apiece, according to regulatory filings with the Registrar of Companies (RoC).

The price is consistent with the rights issue conducted by Ecom Express in July last year. The development was first reported by Entrackr.

Who will be the investors?

The rights issue is expected to be led by existing investors, including private equity firms Warburg Pincus, British International Investment (BII), and Switzerland-based Partners Group.

As per the filings, Warburg Pincus holds a 33.76% stake in Ecom Express, followed by Partners Group at 17.57% and British International Investment at 6.48%.

Notably, these investors have participated in previous funding rounds, including a $39 million investment in October 2022.

Purpose of fundraising

Ecom Express plans to utilize the funds for general corporate purposes, capital expenditure, and operating expenses.

Additionally, the company aims to enhance its reverse logistics and same-day delivery services, which are experiencing increased demand.

The investment will support Ecom Express in expanding its service capabilities across India’s extensive logistics network, which includes over 2,700 towns and 27,000 pin codes.

Planning for IPO launch

According to an ET report, Ecom Express is planning to enter the Indian stock market with a Rs 3,000 crore or $365 million IPO. The report said the company has onboarded bankers such as Kotak Capital, IIFL, Axis Capital, and UBS.

It's worth noting that the Gurugram-based company had previously deferred its planned public listing in 2022 due to tough market conditions.

Is it profitable?

In FY23, Ecom Express reported a 20% increase in revenue, reaching Rs 2,548 crore. However, the company’s losses widened to 312% to Rs 375 crore from Rs 91 crore in the previous financial year.

Despite these losses, the company remains focused on its core logistics services, drawing 90% of its revenue from courier services.

It competes with Delhivery, Xpressbees, Flipkart’s Ekart Logistics, and Amazon Transportation Services.

Like its competitors, Ecom Express services ecommerce shipments for online marketplaces and consumer brands such as Decathlon, Caratlane, and FabIndia.

The company also caters to Meesho, which has recently launched its in-house logistics service provider, Valmo.