Trucking unicorn Rivigo eyes M&A deal at a steep haircut in valuation

Rivigo is on a lookout for buyers. The cash-strapped logistics unicorn has sold 80% of its truck fleet and is currently looking for potential buyers, according to three Entrackr’s sources.

Sources outline that the company is now looking to get acquired for about $300 million—up to a 70% drop in valuation. Rivigo was reportedly valued at $1.05 billion in September 2019 when it raised $4.9 million from KB Platform.

Rivigo is in early-stage talks with Flipkart’s logistics arm eKart and FirstCry for acquisition, according to an Economic Times report.

This comes after the company’s futile attempts to raise a sizable round since July 2019.

The logistics disruptor

Founded in 2014 by Deepak Garg and Gazal Kalra, Rivigo emerged as one of the disruptors in the surface logistics space with a pan-India delivery promise in three days. The company was also the first unicorn from the trucking space or B2B logistics space.

It provides trucking facilities across ten industries including apparels, e-commerce, automotive, frozen and processed foods, FMCG and automotive.

Just a few months before joining the unicorn club, Rivigo raised $65 million from Elevation Capital and Warburg Pictures.

The Covid-19 brake, failed gear

The Covid-19 pandemic and related restrictions wreaked havoc on businesses across sectors. Full-stack logistics companies (ones with their own fleet), however, were among the worst affected.

“Many trucking companies had suffered a great loss of business and [were] burdened with monthly fixed costs such as vehicle EMIs, manpower and maintenance,” said one of the sources cited above. “Rivigo faced a similar situation in the pandemic and its woes deepened in the post pandemic period.”

Rivigo also struggled with the transition to an asset-light model (marketplace one from a full-stack tracking solution), which happened just around when it had become a unicorn.

Sources said that the transition plans didn't work, and the company has lost a lot of clients since then, adversely impacting its topline. Numbers also tell a similar tale: Rivigo’s operating revenue shrank 40% and stood at Rs 634 crore in FY21.

“Existing investors Elevation Capital [formerly SAIF Partners], Warburg Pincus, and KB Global are unlikely to put follow-on capital,” said another source who also wished not to be named.

Unsurprisingly, the company’s board has given the mandate to find a buyer even if it means selling the company at a lower valuation. Only three months ago, Rivigo’s chief executive Garg said that the company will do a pre-IPO round this year and then take it public in 18-24 months. It has raised around $300 million across multiple equity and debt financing rounds to date.

That said, the struggle of Rivigo also emphasizes the fact that building a trucking business even with hundreds of millions of dollars and sound tech can be difficult.

Detailed queries sent to Garg and Elevation on Monday didn't elicit any response. Responses from Warburg Pincus and KB Global are awaited as well. We will update the story as and when they respond.