US-based Clearstone Venture Partners and Granite Hill are co-investing in second round of funding in logistics firm Elbee Express. The exact quantum of investment is not known. However, post transaction, Clearstone (which is leading the investment) and Granite Hill will together own around 50% in the Mumbai-based express delivery company, a source told VCCircle.
When contacted, Rahul Khanna, Director, Clearstone Venture Partners told VCCircle, "This is not something we are in a position to discuss at this time."
The deal will possibly make Clearstone the largest shareholder of Elbee. Clearstone currently owns around 32% in Elbee. The venture capital fund had picked up a minority stake in February 2008 when it teamed up with stock investor Rakesh Jhunjhunwala to put in Rs 25 crore (see our earlier story).
At that time the Indian promoters (Nikhil Shah, a former I-banker with Jefferies, New York, who has worked at express delivery company UPS) was also said to have pitched in with a similar amount allowing him to maintain a majority holding in the company. Clearstone, Jhunjhunwala and Kotak Mahindra Investments are all minority investors in the firm.
According to the deal, mid-stage India focused private equity fund house Granite Hill is picking 1.66 million cumulative compulsory convertible preference shares (CCCPS) while Clearstone is picking up 6.15 million CCCPS). The exact premium to be paid by the two investors for these CCCPS is not known.
Post transaction, foreign investment in the equity of Elbee will go up from 33.96% to 51.93% while that in preference share capital will go up from 74.74% to 86.37%.
In an earlier interview to VCCircle in early 2008, Elbee promoter Nikhil Shah had said, that the company has lined up a Rs 200 crore expansion plan over the next three years to develop infrastructure, expand the network and invest in technology.
Elbee, primarily serving corporate clients to deliver items such as credit cards and cheque books, specialises in next day delivery. Its expansion plans also includes getting into retail segment.
According to an earlier AC Nielsen study, the Indian courier industry is estimated at around Rs 6,200 crore ($1.25 billion), and is expected to grow at 25-30 per cent over the next five years.
Elbee also has angel investment from some of the managing directors of Jefferies and also hedge funds.
(With inputs from Madhav A Chanchani)