Following the series of large share sell-offs, CPPIB (Canada Pension Plan Investment Board) is going to completely sell its residual shareholding in Delhivery, the country’s leading logistics and supply chain company; the most recent was the 2.8% stake offloaded for ₹908 crore through an open market transaction.
P.C: Inc42
CPPIB initially invested in Delhivery in September 2019 where it bought 8% of its stake at $115 million. That was a cautious move which the CPPIB had made to diversify its exposure to portfolio in the fast-growing logistics sector of India. India’s Gurugram-based Delhivery grew rapidly to become one of the significant logistics outfits across the country and providing all-India supply chain solutions.
It sold 20.45 million shares at an average selling price of ₹ 444.30 apiece in April 2024, amounting to 2.8 per cent in Delhivery. With that, CPPIB cut its holding to 3.18 per cent from 5.96 per cent as of March 2024. The sale through the NSE involves large global financial investors such as Capital Group, Fidelity Investments and HSBC.
The decision to divest comes as global investors are reassessing their holdings in Indian startups more broadly. Notably, Japanese conglomerate SoftBank also cut its stake in Delhivery through multiple block deals in 2023.
The market response to these massive share sales has been tepid. Immediately after the April deal, Delhivery’s shares saw a marginal fall, closing at ₹448 on the NSE, down just 0.09%. This inaction suggests that attacks on investors’ confidence in Delhivery’s long-term prospects are yet to take place due to the exit by its major shareholders.
As such, to CPPIB, the divestment would align with its strategy of optimizing its global investment portfolio. By selling its stake in Delhivery, it can redeploy capital into other high-growth opportunities, or strengthen investments made in more mature markets.
In contrast, Delhivery is able to draw the continuous interest of global investors; this goes on to prove its operational model and growth potential in India’s logistics sector. With new investors coming onboard, Delhivery can leverage their cash infusion toward expansion plans and technological up-gradation for sustenance in this competitive and rapidly changing market.
Even as the country’s logistics market is set to grow, the future for Delhivery still stays promising. Increased activity in e-commerce, improvement in infrastructure, and policy reforms all targeting enhancement in supply chain efficiencies will benefit the sector. While Delhivery uses these opportunities to its best advantage, it continues to set on the path to further consolidate this leading market position and bring value to stakeholders.
In effect, CPPIB’s exit means a big deal in the investment sphere of Indian startups. Be that as it may, this strategic shift on CPPIB’s part is an opener to many more diverse investments Delhivery can attract and continue with its growth profile. The extent to which the logistics firm will be able to adapt and continue to innovate will be important in continuing its industry leadership
