Chennai-based TVS Logistics Services Ltd is in talks with private equity (PE) investors for a second round of funding, three people familiar with the development said.
“We have not yet decided the quantum and stake of the investment,” managing director R. Dinesh said in a telephone interview on Saturday.
The firm has plans to raise money from the equity market in the future, and this round of funding is a step in that direction since it would help his firm to achieve scale, Dinesh said.
“While around 20 private equity investors had approached the company initially, the company is in talks with four of them, including KKR (Kohlberg Kravis Roberts) and Temasek,” said a person familiar with the deal.
“They (TVS) are looking to raise around $50 million from private equity investors and this will be through both a primary and secondary route,” said another person involved in the deal. He added that Kotak Mahindra Capital Co. Ltd is the investment banker for the transaction and consultancy Ernst and Young is involved in the due diligence.
Both the people requested anonymity.
Queries to both Kotak and Ernst and Young remained unanswered. Responding to an email query, a spokesperson at Temasek Holdings Pvt. Ltd, said: “It is our long-standing policy not to comment on market speculation about possible investments.” A KKR official did not respond to calls.
With the additional money, TVS Logistics, which has a turnover of around Rs.1,200 crore, will seek to make acquisitions in new and existing markets, said Dinesh. “We are looking to expand our footprint in the domestic market and globally,” he said. The company is eyeing expansion in Southeast Asia, Turkey and South Africa. “As we are a customer-focused company, we expand in geographies where our clients seek to expand in,” said Dinesh.
TVS Logistics, earlier a business unit of TV Sundram Iyengar and Sons, was established as a separate firm in December 2004.
It serves clients in the manufacturing space, including the automotive and industrial productions segments.
The Goldman Sachs Group Inc. and TVS Capital Funds Ltd are minority stakeholders in the company, having invested Rs.100 crore each in 2008.
The TVS Group holds over a 60% stake. With the fresh round of equity infusion, it is likely that PE investors together will hold over a 25% stake, said the first person quoted above.
TVS acquired Michigan-based Manufacturers Equipment and Supply Co., a US-based logistics company, almost a year ago. “We added three new clients through this and we are looking to expand into Europe through them,” said Dinesh. In 2013, the company will expand in Asia, China and Thailand, he added.
The logistics sector has been seeing increasing PE interest in recent months. General Atlantic Llc announced an investment of $104 million in Mumbai-based Fourcee Infrastructure Equipments Ltd on 9 January. India Equity Partners invested an undisclosed sum to acquire the domestic road operations of freight and logistics company TNT Express in India on 5 January.
Warburg Pincus India Pvt. Ltd invested $100 million in Chennai-based logistics firm Continental Warehousing Corp. Ltd on 11 April 2011, and Aegis Logistics Ltd raised Rs.64 crore from Kaup Capital’s Infrastructure India Holdings Fund Llc on 25 February 2011.
According to Venture Intelligence, a research service focused on PE and mergers and acquisitions, PE investments in the logistics space in India declined from 17 deals worth $491 million in 2008 to 10 deals worth $182 million in 2009. In 2010, there were 11 deals worth $245 million.
Source: Livemint