Temasek is picking 27.74% equity stake in courier and express delivery firm First Flight in a deal worth Rs 107.5 crore. Mumbai-based First Flight, which is a public limited unlisted company promoted by the Saboo family, is the second largest domestic courier company with revenues of around Rs 300 crore. It is the largest domestic private equity deal in the courier and logistics space.
As per the deal, Temasek would be picking 41.27 lakh shares through multiple tranches through a preferential issue. The shares would be allotted at Rs 260.47. The funds being raised would be used by First Flight for expansion of its aviation and warehousing businesses. Temasek which is an investment arm of the government of Singapore is routing its investment in the courier company through a Mauritius-based entity Dunearn Investment.
It is learnt that as per the agreement, Temasek would have the right to nominate proportionate number of nominees in the board of First Flight which would have eight members initially. Given the stake involved Temasek would have the right to have two directors on the board. In addition, the existing promoters shall not sell their controlling stake in the company without the consent of Temasek.
First Flight which was set up by OP Saboo in 1988 is engaged in the business of traditional courier delivery. Six years back it also started its surface cargo business and more recently it also opened an aviation division with the induction of three ATP aircrafts.
Temasek is amongst the more active PE funds in the country. In 2006 it was the third largest PE investor in terms of value of investment. It invested over $330 million last year which included a large size deal for a minority stake in Tata Teleservices. Temasek also has existing investments in companies such as ICICI Bank, Mahindra & Mahindra, Welspun India, Shringar Cinemas, Dove Finance and Punj Lloyd among others.
Some of the other PE deals in the courier and logistics space include Reliance Capital’s acquisition of a strategic stake of 44% in DTDC in February 2006 for Rs 70 crore and AMP Capital picking 11% stake in another large domestic player Gati.
Source : Economic Times