Hyperlocal logistics startup Shadowfax is in talks to raise $75-$100 million in a mix of primary and secondary capital, multiple people aware of the matter said. Mumbai-based investment fund A91 Partners is in discussions to finance the primary part, three people said. The deal is currently in the due diligence stage, they added on condition of anonymity as the talks are private.

Eight Roads Ventures, backed by Fidelity, an early backer of Shadowfax, is expected to sell part of its stake in the secondary share sale. Canada Pension Plan Investment Board (CPPIB) and NewQuest Capital Partners, a fund which specialises in buying secondary stakes, have held discussions to buy the stake from Eight Roads, sources said.

Bengaluru-based Shadowfax, backed by homegrown ecommerce player Flipkart, is likely to be valued at $350-$400 million if the deal goes through, the people said. “The due diligence is currently ongoing and A91 is expected to close the primary funding. The secondary sale is still not final so the contours of the round may change,” said a person familiar with the fundraise.

Walmart-owned Flipkart is also expected to participate, having come in as an investor in 2019 when it led a $60 million funding round in the logistics firm. Abhishek Bansal, cofounder and CEO of Shadowfax, declined to comment. A91 Partners, Eight Roads Ventures, and NewQuest did not respond to queries.

CPPIB said it does not comment on market rumours and speculation. According to its annual filings, Shadowfax’s revenue was Rs 464 crore in FY21 compared to Rs 323 crore in FY20. “Currently, the company is clocking around Rs 110 crore in monthly revenue with (cash) burn of Rs 4 crore, indicating consistent growth with reduction in losses,” said one person.

Founded in 2015 as a hyperlocal delivery service by Bansal and Vaibhav Khandelwal amid a big rush of hyperlocal ventures, Shadowfax has transitioned to serving more e-commerce players like Meesho from initially being an on-demand logistics provider to food-delivery companies.

“Ecommerce business is becoming more critical for Shadowfax as food-delivery platforms like Swiggy are trying to solve the hyperlocal problems in-house and the acquisition of Rapido is a testament to that,” an investor in the e-commerce space who did not wish to be identified by name said.

Meesho and Flipkart’s Shopsy compete fiercely at the low-end of the market. Shadowfax provides several logistics services, including last-mile delivery, first-mile seller pick-up, middle-mile transport of goods, and customer returns pick-up. The company’s new funding round comes following the successful initial public offering (IPO) of logistics major Delhivery in May.

“The Indian e-commerce industry is expected to grow 35-40% over the next five years. While the industry is currently registering about 8 million shipments a day, it is expected to go up to 23-24 million shipments by 2026,” said Prahlad Tanwar, global head of logistics sector at KPMG. “Despite having a handful of established players like Delhivery, Ecom Express and Xpressbees, e-commerce logistics is a very exciting and fast-growing space to be in.”