PEs, VCs bet big on logistics business
Rising e-commerce transactions and GST implementation have triggered a wave of activity in the conventional and under-the-radar logistics sector which has emerged as a darling of private equity (PE) and venture capital (VC) investors this year.
While the world’s largest PE firm Blackstone recently called logistics their ‘highest conviction’ sector, PE-VC funding in Indian logistics sector in 2019 (YTD) is already at thrice the value of 2018.
Data from research firm Venture Intelligence shows around $620 million worth investment in logistics across 12 deals this year, compared to $265 million in 2018.
Fundraising by new-age logistics players Delhivery ($413 million) — which also achieved unicorn status this year, Blackbuck ($132 million), Rivigo ($36 million), Locus ($26 million) and others, are a few top deals that has helped 2019 reach record highs in the past five years.
The mergers and acquisition action in the sector too has clocked $603 million across 10 deals, with a bulk of them being strategic deals in warehousing. Global ports operator DP World’s acquisition of KRIBCHO Infrastructure for $145 million and LOGOS’ entry into the Indian warehousing market with the Casagrand Distripark buy are a few top deals. Kushal Nahata, co-founder and CEO of logistics tech provider FarEye calls it the Amazon and Alibaba effect. “Large enterprises today seek to achieve the same experience that customers have come to expect from Amazon or Flipkart,” he said.
Starting off as a B2C wave, B2B logistics startups engaged in last-mile delivery, warehousing, freight, supply chain optimisation etc. are now enjoying investor patronage.
Supil Chachan, director of truckings platform BlackBuck, says a large total addressable market (logistics spends in India are at almost $300 billion) and huge inefficiencies requiring tech intervention, has attracted investors. Blackbuck has raised close to $230 million in equity till date since 2015 and is on track to reach the unicorn status- a milestone Chachan feels is small given the size of the sector. “BlackBuck through its asset-light marketplace model has already proven to be a game changer and has successfully solved legacy problems like fleet under-utilization and price opaqueness,” Sameer Gandhi, partner, Accel, said, while investing in the startup.
Nishith Rastogi, co-founder and CEO of logistics optimisation tech Locus, says logistics and supply chain has long been unstructured and chaotic in India- both aspects that can be best solved using emerging tech such as AI and machine learning. The sector is more than a flash in the pan, and investor interest is here to stay, he adds.
Source: ET Tech