Tata Capital's flagship private equity fund Tata Opportunities Fund is investing up to Rs 250 crore ($40 million) for a minority stake in TVS Logistics Services Ltd. The money would be used to bankroll the privately held logistics firm to acquire Tata Group's privately held logistics firm Drive India Enterprise Solutions (DIESL).
DIESL is a logistics service provider to consumer durables, FMCG, retail and telecommunications sectors. Founded in 2003 as a 50:50 joint venture between Tata International and Tata Industries, DIESL has built a pan-India 3PL network with more than 180 warehouses and 6.5 million square feet of storage space, catering primarily to the consumer products industry. DIESL had revenues of over Rs 950 crore in the year ended March 31, 2015.
Its major customers include Colgate, Cadbury, Amway, Voltas, Sony, Philips, Godrej, Spencer’s, Walmart, Titan, Tata Motors and Hyundai.
The firm has a warehousing network in north and east India. This gels well with TVS Logistics, which has a firm footprint in south and west India and is known for providing services to group two wheeler firm TVS Motors.
The deal is subject to approval from Competition Commission of India and other regulatory clearances.
“This move enables us to add to our base of non-auto customers. Besides, we have widened our service capabilities including last mile delivery and other capabilities like demand forecasting and technology logistics through our overseas acquisitions,” says R Dinesh, managing director at TVS Logistics.
TVS Logistics has acquired around 12 companies outside India prior to this deal. Other PE investors in the firm include Goldman Sachs and KKR.
“The fund believes that the new government’s thrust on developing infrastructure and reforming taxation, especially the Goods and Services Tax, will provide a conducive environment for the growth of professionally managed 3PL companies offering world class solutions,” says Padmanabh Sinha, managing partner of the Tata Opportunities Fund’s advisory team in India.
Tata Capital also gets a board seat in TVS Logistics as part of the transaction.
Tata Opportunities Fund had raised $600 million in 2013 with a mandate to back other Tata Group firms besides some other external companies. It has backed names like Tata's budget hotel chain Ginger, DTH venture Tata Sky besides auto component maker Varroc and Shriram Properties.