Mahindra purchases Rivigo’s B2B express business for Rs 225 crore

• ByStartupStory     |    September 27, 2022

Rivigo, a startup logistics company, sold its business-to-business (B2B) express arm to Mahindra Logistics in a fire sale for Rs 225 crore. The transaction is anticipated to be finalized on or before November 1, per a regulatory filing with the BSE. Mahindra Logistics will acquire the express company through a business transfer agreement (BTA), encompassing the clients, personnel, and assets of Rivigo’s B2B express business and its technology platform and brand.

Last month, it was reported by ET that Rivigo had conducted preliminary conversations with e-commerce platform Flipkart and omnichannel baby goods store FirstCry over a possible sale. The logistics technology unicorn has had trouble raising new capital as investors become wary about the industry owing to the current economic recession.

Both full truck load (FTL) and business-to-business (B2B) express are fundamental to Rivigo’s operations. The report says, the company’s B2B express division brought in 295 crores in revenue during FY21, out of a total of 634 crores. The B2B express division of Rivigo reported a revenue of Rs 371.3 crore in FY22, down from FY20’s 528.5 crores before the Covid-19 epidemic.

“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.

Rivigo’s rivals include Delhivery, Safexpress, Blue Dart, and Gati. The firm will continue to hold its truck fleet and FTL operating rights, which were valued at over $1 billion at its most recent fundraising round. The price at which Mahindra Logistics bought Rivigo’s B2B express business is less than one time the firm’s annual sales, resulting in a major value erosion for the company. The firm has struggled to maintain expense management.

“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 source said. 

The purchase is expected to improve Mahindra Logistics’ current B2B express business by using Rivigo’s formidable network, technology, and process capabilities.

Follow Startup Story