Mahindra Logistics has acquired the business-to-business (B2B) express unit of logistics startup Rivigo in a slump sale for Rs 225 crore.
The deal is expected to close on or before November 1, according to a regulatory filing to the BSE.
Under the agreement, Mahindra Logistics will acquire the express business through a business transfer agreement (BTA), including the customers, team, and assets of Rivigo’s B2B express business, its technology platform, and the overall brand.
ET reported last month
that Rivigo held talks with ecommerce marketplace Flipkart, and omnichannel baby products retailer FirstCry for a potential sale.
The logistics tech unicorn has struggled to raise fresh funds as investors turn skittish due to the ongoing economic slowdown
A slump sale is when a company sells an undertaking without taking the value of individual assets and liabilities into account.
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Rivigo operates in two key business segments – full truck load (FTL) and B2B express business.
In FY21, its total revenue was Rs 634 crore, and the B2B express business constituted Rs 295 crore of that, according to the filing.
During FY22, the turnover of Rivigo’s B2B express business was Rs 371.3 crore, less than the pre-Covid-19 pandemic turnover of Rs 528.5 crore in FY20.
Rivigo competes with Delhivery, Safexpress, Blue Dart and Gati.
Valued at over $1 billion when it last raised funding, the company will continue to own its truck fleet and the rights to the FTL operations.
The deal marks a significant value erosion for the company as the valuation at which Mahindra Logistics has acquired Rivigo’s B2B express business is less than 1x multiple of its revenue.
The company has been struggling to control costs.
It posted a loss of Rs 320 crore on revenue of Rs 634 crore in FY21.
“Rivigo has historically attracted premium valuations and investment enabled by its early-mover advantage, superior growth vs peers, unique operating model and quality of investors. The company has historically been valued at several multiples of revenue across multiple series of investments,” said Prahlad Tanwar, partner and global head of logistics and postal services at KPMG.
The Gurugram-based startup, which operated in a “relay trucking model”, pivoted to relay-as-a-service model during the pandemic.
“The company is not in great health, it has tweaked its business model in the past from being an aggregator to being asset-heavy and owning trucks to now again being asset-light… its fleet size reduced significantly from 3,000,” a person in the know told ET earlier.
The company owned about 1,000 trucks as of August.
The acquisition is expected to augment Mahindra Logistics’ existing B2B express business by using Rivigo’s strong network, technology and process capabilities.
“B2B Express Logistics continues to see strong tailwinds as customers focus on deepening delivery networks, enhance digital adoption and invest in agile supply chains. This acquisition will enhance and strengthen our offerings and reach for our customers in the B2B express and PTL (partial truck load) space,” said Rampraveen Swaminathan, MD & CEO, Mahindra Logistics.
Rivigo sought to raise $50-$100 million previously and wanted to go public by 2024.
Backed by venture fund Elevation Capital (formerly SAIF Partners), private equity firm Warburg Pincus and others, the logistics firm has faced headwinds over the past few years.
Last year, one of its cofounders, Gazal Kalra, left the company.
“Rivigo has its foundation in the relay full truckload business. Over the years, we have built a strong brand in the PTL/express services with a pan-India network and high-quality technology and service backbone,” said Deepak Garg, CEO of Rivigo. “We believe the customers, and employees of our PTL business will benefit greatly from being part of a high-quality, end-to-end supply chain services company like Mahindra Logistics.”