Internal financing round to try to provide more gasoline after the post-pandemic stoppage of electronic commerce and the investment ‘boom’. The Spanish logistics startup Paack has closed the round with current partners of more than 40 million euros, more or less equally between ‘traditional’ debt and equity. Infravía Capital, the French-based private equity firm that has already entered into the previous expansion led by Softbank and which involved a total outlay of 200 million, has had significant weight in the transaction. The company accumulated losses before aggregate taxes among all its subsidiaries of just over 61 million euros during the past financial year, which is between 4 and 5 times more than a year earlier.
Negotiations for this transaction have been taking place in recent weeks, as reported by La Información. Finally, the expansion has closed below that barrier of 50 million euros. As has been the case with many other companies that raised very relevant rounds during 2021 or early 2022, an increase contributed by the main funds in the shareholding structure has been used, which usually reduces the chances of a significant downward valuation adjustment. In total, according to knowledgeable sources, the amount is around 40 million, of which some 20 million are in capital and the rest in ‘traditional’ debt (not notes convertible into shares).
Most of the current partners will have taken part in the transaction, with a relevant weight from Infravía, a ‘private equity’ manager with more than 10,000 million euros of assets under management that also participated in some rounds of Jobandtalent and also in the latest image of the capital increase of the ‘big data’ firm Stratio. Among the shareholders, Softbank stood out, which was the one that led last year with its ‘Vision Fund’ fund, but there are also others such as the Spanish funds Big Sur, Kibo Ventures or All Iron Ventures or the international Bregal Milestone or Unbound. In total, it would have exceeded 300 million dollars, according to data from the Crunchbase database.
This will be the bridge to try to bring profitability closer at a time when the large international funds seek visibility of the benefits. The company carried out a strong investment after the outbreak of the coronavirus thanks precisely to the ‘mega round’ announced at the beginning of 2022. There a relevant one was made due to the commitment to robotize the facilities. But the growth forecasts for the entire e-commerce sector were too optimistic for what later turned out. And one of the most relevant examples was Amazon, which used a certain downward adjustment after the post-Covid ‘boom’.
2021
Paack has tried in the last twelve months focused on the optimization of the income statement. In the non-financial report for that same year, consulted by La Información, it makes it clear that given the “changing macroeconomic environment” in Europe in the past year, the company “increased its focus on profitability” during the second part of the year and focused on growth in the markets in which it operated: Spain, Portugal, the United Kingdom, France and Italy (it joined the latter in May 2022).
Red numbers
“Improving profitability will continue to be one of Paack’s main objectives in 2023, especially in Spain, its main market,” he pointed out. For this, he reduced the workforce to 715 at the end of the year. Specifically, according to his report, he obtained losses before aggregate taxes of just over 61 million euros. By market size, this is the distribution: 21.8 million euros for Spain; 15.6 million for France; 15.8 million for the United Kingdom; 2.5 million for Portugal and 3.4 million for Italy. The rest corresponds to the matrix. This means multiplying by four to five times the red numbers from a year earlier.
The business model is based on a complete logistics solution used for three types of customers. On the one hand, large multinational distributors to whom they offer solutions from storage to personalization of delivery times at home. On the other for smaller online sellers. And lastly, last-mile deliveries of ‘thermosensitive’ products, that is, food and beverages that require greater care to maintain the cold chain. At the end of 2022, according to its own figures, it had two distribution centers in Portugal; four in Italy; five in the UK, nine in France, and 16 in Spain. It operates in those five markets.
This internal round is by no means exceptional in the startup ecosystem. There have been others in Spain that have also resorted to their current partners and have not opened their shareholding to other funds. This is the case of Wallapop, which closed an ‘extension’ of the round that it carried out at the beginning of 2021 with an injection of 81 million euros with Korelya Capital, the fund promoted by the Japanese giant Naver and, ultimately, its reference shareholder. The other is that of Fever, which once again turned to Goldman Sachs as the leader to raise more than 100 million euros between the sale of secondary and new shares.
