Kapruka is gearing up for an IPO too, with LKR 505.5 mil target

Following hSenid’s IPO, it appears that Kapruka is next in line to go public. Accordingly, Kapruka is looking at an LKR 505.5 million IPO for 20% of the company’s shareholding. The investment is set to be directed towards upgrading existing business operations (LKR 100 mil) and expanding into new initiatives (LKR 405.5 mil). This takes the form of upgrading existing technologies and infrastructure on existing platforms and launching Kapruka Platform Services.

My sentiment of taking Kapruka public is maybe similar to getting my daughter married, one day. It's emotional. So much commitment was put into bootstrapping a company to this level. Here is the IM and will publish IPO dates soon. Most likely mid-Dec.
https://t.co/ZVZ1gQVai2

— Dulith Herath (@DulithHerath) December 2, 2021

Specifically, Kapruka expects to introduce upgrades and new features on its existing platforms such as new CRM systems, all wallet payment options, competitor price monitor module for suppliers, AI-enabled auto route planning for delivery, and a host of others.

New intiatives

Kapruka Platform Services translates into Kapruka Partner Central, Used Goods Marketplace, Kapruka B2B, and Cross Border Exports.

Kapruka Partner Central

The idea is to introduce a marketplace for established brick-and-mortar companies in Sri Lanka. This will function similarly to Fulfilment By Amazon.

Used goods marketplace

It’s exactly what the term implies. This is meant to be an eCommerce space for pre-owned goods. Kapruka plans to launch a sub-brand dubbed “soldout.lk” which will be a fully owned subsidiary under Kapruka.

Kapruka B2B

A product aimed at businesses with regular wholesale bulk purchasing

Cross Border Exports

Kapruka aims to act as an eCommerce distributor for local brands in international markets. Here, Kapruka will essentially manage, sell and ship local brand products. The company also states that it plans to sell Kapruka-branded Ceylon cinnamon on global platforms.

Amidst growing interest

Kapruka began almost two decades ago, all the way back in 2002 as one of the first players to enter the eCommerce foray in Sri Lanka. Today, the company has grown its presence to markets like the US, UK, Australia, and India. In fact, the company claims that roughly 57% of its sales come outside Sri Lanka. Interestingly, 27% of its revenue amount to Kapruka’s own cakes and flowers along with gift vouchers.

Beyond Kapruka, eCommerce itself has witnessed a growing interest in Sri Lanka as of late, particularly in a Covid-affected landscape. But despite only a mere 6.2% of the population being estimated to make online purchases and/or pay bills online, eCommerce is shaping up to be the norm for a lot of people. For instance, not many would have opted to order groceries online a few years back despite the technology being available. Today, we see everything from large-scale retailers like Abans, Singer, and Cargills to even small-scale platforms like Nuttery and Good Folks cater to online demands.

Challenges and controversies

Though, that’s not to say it hasn’t been challenging for Sri Lankan eCommerce. Adjusting to the sudden demand spike has been tricky over the past year. In fact, Kapruka came under a lot of fire over how it handled the platform during the initial phase of the coronavirus pandemic. Groceries, especially essential items were exorbitantly high. For example, a canned fish at the time would have cost you LKR 1,200 (LKR 550 + delivery charge of LKR 650).

Things became problematic enough that the Consumer Affairs Authority raided the office and questioned the management. Of course, following the incident Founder and Chairman Dulith Herath issued a blog post clarifying the matter. Although it didn’t necessarily fill in all the blanks.

Overall, the initial 2020 period proved to be challenging for most online operations, both the experienced entities as well as the new entrants. Though now the industry appears to be adjusting to the current demands. Players like Daraz.lk is already looking at hosting at least 100,000 active SMEs on its platform

A busy time for Lankan tech?

Regardless, it’s still an exciting time for Sri Lankan tech. Recently, local tech giant WSO2 got a whopping USD 90 million funding from Goldman Sachs followed by hSenid’s listing in the CSE. Now, Kapruka is en route to becoming the first Lankan-listed eCommerce company. There’s likely more on the way, especially with rumors of Arimac going public as well.