Amazon is looking to purchase 51% Share In Ecom Express For $600 Mn

Amazon as well as Ecom Express are in the initial discussion phase for an eventual co-promotional arrangement in Ecom Express

Ecom Express which turned profitable in FY21 is valued at close to $800 million and was recently in the process of putting off plans to proceed with an IPO of INR 4,680 crore.

Amazon is the only company that doesn’t have an internal delivery system is said to be looking to develop logistic capabilities by acquiring

As e-commerce continues to gain momentum in the Indian retail market, Amazon (who doesn’t own an internal shipping system) is reported to be looking to buy the majority stake in the logistics company Ecom Express for around $500 Mn-$600 Million.

According to an Mint article the e-commerce giant is planning to establish an internal logistics division in order to keep pace with its main competitor, Flipkart. The report also states it is believed that Amazon as well as Ecom Express are in the preliminary stages of discussing an eventual co-promotion agreement within Ecom Express. Ecom Express is expected to choose an equity stake of 51% by offering an exit to Warburg Pincus.

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Although Ecom Express is already among Amazon’s delivery partners, it also serves numerous other ecommerce companies , including Paytm, Nykaa, Myntra among others. In the past, the logistics market in India was valued at $250 billion and is projected to reach $380 billion in 2025. Of course, Amazon will not be left out when competitors Jio and Flipkart are dominating the market with their own logistics departments.

The deal is expected to appraise this Delhi NCR-based logistics company at $1.2 Billion, an increase from the current estimate of $800 million.

To date, Amazon subsidiaries have acquired four startups from India including Glowroad, Emvantage Payments, Tapzo and Westland. But none of these companies is as large in size as Ecom Express.

The transaction, that is in its preliminary stages is likely to be subject to the attention of antitrust watchdogs on two occasions : one the most recent M&A policies as well as Ecom Express’s IPO plans.

Ecom Express’ Stalled IPO Plans

The move came shortly following Ecom Express had decided to hold off on launching their INR 4,680 crore IPO. The 10-year-old company is seeking to raise $100-$150 million from venture and private equity capital investors.

Therefore, Amazon’s major acquisition is said to ease the departure of a portion members of Ecom Express’ shareholders and as well to bring in new money for the business.

An Amazon spokesperson refused to discuss the story, saying it was speculation. The emailed inquiry sent at Ecom Express did not elicit an answer until the time of publishing the report.

Ecom Express is India’s third-largest logistics startup, a mere second in size to Delhivery as well as XpressBees. Although Delhivery has already been listed on the exchanges (giving an acceptable beginning on its day of its listing) However, XpressBees’s sibling company FirstCry delayed it IPO plans.

The company was founded with TA Krishnan Manju Dhawan K Satyanarayana and Late Sanjeev Sxena, Ecom Express offers logistics solutions for Indian companies that sell online and operates in 2.7Kplus locations across India.

Just last month, it announced it would be bringing on over fifty thousand delivery partners by the end of September particularly to cater to the anticipated rise in demand for its services during the Christmas season’. The company currently employs close to 30K delivery service providers and full-time staff.

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The fiscal year ended in FY21. Ecom Express posted revenues of INR 1,622 crore and INR 57 profit Cr, as compared to revenues of INR 1,018 Cr FY20, which was an expense that was INR 313.5 Cr.

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