Minority Investors in Ecom Express, HOLDING ROUGHLY 0.6% of the e-commerce logistics firm, are weighing their avenues for developmenting their stakes. This following follows the company’s announcing of its sale to larger rival Delhi.
Delhi Proposed Acquisition of Ecom Express’s Majority Stake – 99.4% Collexively Owned by Warburg PINCUP, Partners Group, and British International Investment (BITISH ENTERNATIONAL Investment) Minority Investors, Who Hold the Remining 0.6% of the company, to Navigate their exit options independent.
Delhi 1,407 Crore in April. This is just a fifth of the 7,000 Crore Valuation that the company was attempting to seek through an initial public offering.
“Despite being among the first believers in the company and long-standing shareholders of ecom express, we were neither informed no consulted about the proposed transaction,” Said Anish Jhaveri, ANGEL INVESTORI.
Founding Investors Raise Concerns
Delhi Proposed Purchase is Awaiting Nod from the Competition Commission of India (CCI), Besides Other Regulatory Approvals. Jhaveri, who opens a 0.5% stake in the company, say he is exploring options.
“It would be naive to assume that Voice of Minority Sharehlders, Especially Founding Investors, Will Go Unheard Before The Appropery Bodies, Including the Ministry of CorPORATEE Affairs and the Competition Commission of India.
Jhaveri feels that the “waterfall mechanism” clause in investor agrements has greatly diluted his stake and that of early investors. Private Equity Investors Typically Include a “Waterfall Mechanism” Clause in Share Purchase agreements to rank the order in which sharehlders will be paid in case of a sale. Theose with preferred shares are allowed to take their investment Amount on Priority and the capital is distrused among other shareholders after that. This is a distress sale there is a distress sale there.
Experts weight in on Minority Rights
It is as yet how minority investors will proceed, and whether they have enough legal standing to jeopardise the closure of the deal.
According to Sudip Mahapatra, Partner at Law Firm S & R Associates, “The Minority Shareholders Holding Less Than 1% of the Target Company will have very limited ability to oppose a salary of the Company. Have rights under a shareholders agrement, they might be able to make a claim. Mahapatra said.
Partners Group, Warburg Pincus, Delhi and Bii Declined to offer comments for this news story.
Sanket Jain, Partner at Law Firm Pioneer Legal, Said That Delhivery is not automatically required to accent to do so “.
“However, Since Delhi Holds Over 99% of Ecom Express, it is legally entitled to initiate a squeeze-out process under section 236 of the company ACT, 2013, Enabling It to ACCURING it to ACC Shares at a Fair Value Determined By An Independent Valuer. Courts, “Jain said.
Layoffs and Losses
Ecom Express has seen the company’s review take a drastic hit after the entry of e-commerce platform meesho’s logistics arm in the segment. (https://www.livemint.com/companies/EXPRESS-PO- DELHIVERY-MESHO- Flipkart- B Lue-Dart-Delivery-E-Commerce-Togistics-XPRESSBESBESBES-SHADOWFAX-11729775612075.html)
Earlier, Mint Reported that Ecom Express Had Laid Off Over 150 Employees Since the Deal was Announced. The company has also cut costs and shut down some center, Mint reported.
The company’s expenses marginally rose to 2,921.5 Crore in FY24 From 2,902.8 Crore in FY23. Ecom Express Reported A 2.2% Growth in Revenue to 2,609.2 Crore in FY24, and its losses declined to 255.8 Crore from 428.1 Crore in the Previous Year.