Tata Capital, Everstone in race for Transpole Logistics' stake

Fidelity Growth Partners will make a partial exit

The Indian logistics sector is turning to be a hot destination for private equity investors, following the government's decision to allow FDI in multi-brand retail.

In the latest development, three PE majors -- Tata Capital, ChrysCapital and Everstone Capital -- have joined the race to acquire a significant majority stake in Delhi-based Transpole Logistics. Headquartered in New Delhi, Rs 500-crore Transpole has a presence across India, China, Hong Kong, Korea and South East Asia.

Avendus Capital is advising Transpole to find suitable buyers.

According to sources in the know, through the second round of funding, existing PE investor Fidelity Growth Partners will make a part exit from their one-year-old investment in Transpole. Fidelity had invested about Rs 60 crore in April last year by acquiring a significant minority stake. Through this round of funding, Transpole is likely to raise about Rs 200 crore.

Mail sent to Transpole management did not elicit any response. Private equity investors also did not respond to Business Standard queries. A spokesperson from Avendus Capital said, "As a matter of policy we do not comment on deal queries."

Transpole Group was founded by logistics professionals - Anant Kumar Choudhary, Vivek Shukla, and Praveen Chand Rai in 2004. The group had appointed Phillip Ng, ex Managing Director of Fedex Asia Pacific in 2010 as MD - Far East, Transpole for driving Asian expansion.

Year 2012 has witnessed about 11 deals worth $232 million in logistic space till date, against 10 deals worth $195 million in 2011, according to data from VCCedge. The sector has witnessed 84 deals worth $1.3 billion since 2007.

K Ramakrishnan, executive director, Spark Capital Advisors said, “There is direct correlation between economy and freight movements and hence, logistic business. Though this sector is fragmented with too many small players, reasonable sized players are getting capitalised as more corporate players and investors are entering into it."

According to a recent study by Deloitte and Indian Chamber of Commerce, the market size of the logistics sector in India to be between $90-125 billion. "Sources also estimate that the industry employs over 45 million people and is growing at the rate of 15 per cent with sub-sector growing at even 30-40 per cent per annum. Due to its current growth and its future growth potential the Indian logistics sector is viewed as one of the most attractive in the world," said the study.

In January 2012, General Atlantic had made one of the largest investments in logistic space by investing $104 million in Fourcee Infrastructure. The US-based PE major Warburg Pincus invested $100 million in Chennai-based Continental Warehousing in April 2011. Other major deals in this space include KKR & Goldman Sach's $53 million deal with TVS Logistics and Blackstone's investment in Allcargo Logistics.