, a London-based Alternative Investment Market listed fund, has invested Rs 40 crore in a container freight station (CFS) formed as a joint venture with Chennai based Sattva Business Group. The CFS will serve the port of Ennore in Tamil Nadu.
Eredene will invest up to £5 million (Rs 40 cr) for an 85% stake initially, which will be diluted in tranches as the business achieves certain milestones. An SPV will develop and operate the CFS at a site18 km away from Ennore port.
Eredene had in Sep 2007 invested £0.85 million (Rs 6.86 cr) for a 49% stake in a JV for a CFS at Vichoor (near Chennai port), which is currently serving the nearby port of Chennai. It also invested £3 million ($6.24 million) for a 40% stake in a 32-acre CFS project in the south of Gujarat, to develop the first dedicated CFS at Pipavav port.
The new CFS will be located on a state highway near Ponneri to the north of Ennore. The CFS will be converted from a large-scale warehousing operation into a full-fledged CFS in time for the opening of the new Ennore Container Terminal scheduled for 2011.
The Eredene Group is also bidding for the Ennore Container Terminal project in a consortium headed by Spain's port operator, Grup Marítim TCB SL, Spanish construction group Obrascón Huarte Lian SA and GE Mauritius Int Holdings, a subsidiary of America's GE Equipment Services. Eredene has a 22% stake in this consortium. The same consortium has also bid for building and operating a new 330-metre container terminal at Jawaharlal Nehru Port Trust (JNPT) near Mumbai.
Eredene is an AIM listed investor in Indian infrastructure developments and this is its ninth JV investment in India and the third in a CFS. Its previous investments include Matheran Realty, Box-Trans Logistics, MJ Logistic Services among others.
Ennore Port, which began operations in 2001, was set up to ease the congestion at Chennai Port. The significance of a CFS in this region can be gauged from the fact that Chennai-Ennore region is the centre of India's automobile industry with manufacturing facilities of BMW, General Motors, Hyundai, Ford and Renault-Nissan and additionally, a major manufacturing and light industry hub.
The Sattva Group is a regional logistics operator and has been operating a CFS in Chennai since 2000. LCL Logistix which is funded by Tuscan Ventures, also opened up a 80,000 sq mt CFS in Pipavav shipyard in mid of this year and operates a Central Warehousing Corporation owned CFS at Adalaj, Ahmedabad, with further plans to open two additional CFSs. Other recent PE deals in allied sectors are Warburg Pincus's $35 million investment in Gangavaram Port and 3i Group's in Krishnapatnam Port.
HSH Nordbank AG, a German bank and one of the biggest shipping finance companies, is also planning to set up a fund to invest in maritime-related sectors in India.