Ontario Teachers’ Fund Receives CCI Approval for Minority Stake Acquisition in XpressBees
Three points you will get to know in this article:
- The Competition Commission of India (CCI) has approved the proposal for the Ontario teachers’ fund to acquire a minority stake in XpressBees, a logistics giant.
- The transaction was cleared through the green channel route, as it was determined that it would not have a significant adverse effect on competition in India.
- XpressBees is a third-party logistics startup that offers services in B2B, B2C, and cross-border logistics, with a valuation of $1.1 billion as of February 2021.
On Thursday, October 26, the Competition Commission of India (CCI) gave the nod to the Ontario teachers’ fund’s plan to secure a minority interest in the renowned logistics powerhouse, XpressBees.
In its official decree, the CCI granted approval for the acquisition of a stake in BusyBees Logistics Solution, the parent company of XpressBees, utilizing the efficient green channel pathway. This unique route facilitates the swift approval of transactions that pose no significant adverse impact on competition, as long as they are promptly communicated to the vigilant competition watchdog. On Thursday, the Competition Commission of India (CCI) gave the green light to the Ontario Teachers’ Pension Plan board’s plan to secure a minority stake in the renowned logistics firm XpressBees.
According to the CCI order, the proposal to acquire a stake in BusyBees Logistics Solution, XpressBees’ parent company, was approved through the expedited green channel route. This channel expedites the approval process for transactions that pose no significant risk of negatively impacting competition, and upon notification to the competition watchdog, such transactions are considered approved.
The CCI emphasized that the Ontario Teachers’ Pension Plan board’s intended transaction would not result in a notable adverse effect on competition within the country. The competition watchdog explained that, as there are no horizontal overlaps, vertical relationships, or complementary businesses between the Acquirer (OTPP) and the Target (BusyBees) in India, the proposed transaction is not expected to adversely affect competition. Consequently, it falls under the green channel route, facilitating a smoother approval process.
This approval, in accordance with Regulation 5A and other provisions of the Competition Commission of India Regulations, 2011, marks a significant step forward in the acquisition process. The OTPP board’s intentions regarding the stake to be acquired and the transaction’s proposed monetary size remain unclear.
Interestingly, this development follows reports from a couple of months ago suggesting that the third-party logistics (3PL) startup was engaged in discussions with the Ontario teachers’ fund. The talks aimed to secure a funding of $100 Mn, valuing the startup at $1.4 Bn.
XpressBees charted its course as a separate entity from its parent company, the e-commerce giant FirstCry, back in 2015. Specializing in B2B, B2C, and cross-border logistics services, the startup boasts a network of over 100 hubs, encompassing a warehouse capacity of 3 Mn sq. ft. Covering 20,000 pin codes nationwide, the platform efficiently manages a staggering volume of over 3 Mn shipments daily.
XpressBees found itself valued at $1.1 billion in February of the previous year, securing a substantial $300 million in funding from key investors like Blackstone, TPG, and ChrysCapital. Fast forward to April this year, the logistics unicorn received an additional $40 million infusion from the Malaysian sovereign fund Khazanah Nasional Berhad, courtesy of a secondary sale facilitated by existing investor Elevation Capital.
In a competitive landscape dominated by 3PL heavyweights such as the publicly listed startup Delhivery and Ecom Express, XpressBees continues to hold its ground. The latest financial snapshot reveals a net loss of INR 27.1 crore for XpressBees in FY22, marking a 57% year-on-year reduction. This downturn in losses contrasts with a robust operating revenue of INR 1,904.4 crore, signaling an impressive 1.8X year-on-year growth.
The Competition Commission of India (CCI) has approved the Ontario teachers’ fund’s proposal to acquire a stake in logistics giant XpressBees through the green channel route. The transaction, which is deemed not to have a significant adverse impact on competition, will not cause appreciable adverse effects in India. XpressBees, a third-party logistics startup offering B2B, B2C, and cross-border services, has a valuation of $1.1 billion. The approval comes after reports of the startup being in talks with Ontario teachers’ fund to raise $100 million at a $1.4 billion valuation. XpressBees competes with Delhivery and Ecom Express in the logistics industry.
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