Mumbai-based logistics and courier company Elbee Express is going fora third round of fund raising from existing investors Clearstone Ventures and Granite Hill.
Clearstone, which already holds 45.2% stake in Elbee, will invest a further Rs 8 crore ($ 1.7 million) and Granite Hill will bring in additional Rs 4 crore ($0.85 million).
Rahul Khanna, director with Clearstone Venture Partners, confirmed the development to VCCircle without commenting on the deal size or stake. “We continue to be excited about the Express logisitics market and are committed to supporting the management as they scale the business to new levels,” said Khanna in an emailed response.
An email sent on Tuedsay to both Granite Hill and Elbee Express did not elicit any response at the time of filing this story.
The combined holding of the two fund houses will increase from 50.43% to 58.15% that would give Clearstone near majority stake in the Indian firm, a source told VCCircle. The deal would value privately-held Elbee Express at Rs 155 crore($33 million).
The fresh fund raising is through the cumulative compulsory convertible preference shares to Clearstone Ventures Mauritius and Granite Hill India Opportunities Fund (GHIOF), a mid-stage private equity fund focused on India-related investment opportunities.
Early this year, Clearstone and Granite Hill had co-invested in second round of funding in Elbee Express which took their combined stake to 50%.
Founded by Nikhil Shah (a former I-banker with Jefferies, New York with a stint in express delivery company UPS), Elbee Express also has investments from ace Indian portfolio investor Rakesh Jhunjhunwala and Kotak Mahindra Investments who are all minority investors in the four-year-old firm. The first round of funding from Clearstone in 2008, when it invested around Rs 25 crore along with Jhunjhunwala, was the first pure play ‘venture capital’ investment in an Indian logistics company.
Post the transaction, the Indian shareholders will own 25.5% through equity and 16.35% through preference shares in the logistics company.
Elbee, primarily serving corporate clients to deliver items such as credit cards and cheque books, specialises in next day delivery. It has been looking to expand by getting into the retail segment. In an interview to VCCircle last year, Elbee promoter Nikhil Shah had said 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.
According to an earlier AC Nielsen study instituted by the Express Industry Council of India (EICI), the courier industry in India is estimated to be around Rs 6,200 crore ($1.5 billion), and is expected to grow at 25-30% over the next five years.
The Indian market is characterised by a few large premium players, a few organised companies, and a large number of unorganised logistics companies totalling 2,000. However, the international express delivery companies like UPS are more focused on the international market rather than the domestic market, leaving the field open to upcoming players like Elbee.