The ‘last-mile’ sector often struggles with profitability. Yet last-mile logistics is attractive to investors because it offers the prospect of accessing the potential for growth of internet-based retailing.
For example, the UK-based Evri is up for sale and there does not appear to be any shortage of potential buyers. The US-based private equity company Advent International, which purchased 75% of the equity of what is now called Evri from Otto Group for £UK850m in 2020, is reported by a number of press sources to have been looking to sell Evri for at least six months.
It is suggested by various media sources that the private equity companies Apollo Global Management and Platinum Equity are among the bidders. However, over the past couple of weeks, there have been suggestions that the Chinese internet retailers JD.com and Alibaba have expressed serious interest in Evri. Certainly, JD.com has a reason to consider purchasing Evri as the two companies embarked on a cooperation agreement in January which appears to focus on JD.com adopting technologies from Evri, although JD.com may also be interested in creating an inhouse last-mile capability outside China. It is unclear how important this agreement is to Evri’s future. Certainly, the entry of a Chinese internet retailer would be a significant development in the UK’s last-mile sector. It may also offer any Chinese company a platform to expand in other Western markets, especially but not only, European markets.
Evri is a significant player in the British last mile sector. It probably has around 20% of the market measured in terms of revenue, however, it faces strong competition not just from Amazon but also from Royal Mail amongst several others. The company is profitable, seeing profits of UK£51m and revenue of £1.46m in 2023, although these had both fallen back from the highs seen during the e-retailing boom of 2020-2022.
Evri is not the only last-mile company seeing ‘significant corporate events’ in Britain. Daniel Kretinsky’s EP Group is looking to close its bid for Royal Mail whilst Yodel continues to struggle with its capital investment requirements. Both Royal Mail and Yodel have experienced variable profitability over a number of years yet across the world last-mile has the potential for growth. The UK is a competitive and mature market, but most economies offer more potential for gaining share of the overall retail sector. This will lead to continued acquisition activity.
Author: Thomas Cullen
Source: Ti Insight
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