In a unique model in the Indian venture capital space, Tuscan Ventures, the VC firm focussed on shipping & logistics, plans to set up a Rs 150-crore cold storage-logistics company with presence across the country.
In the initial stage, Tuscan, which is incubating the company, will invest about Rs 25-30 crore while the remaining fund will be raised through other investors in second phase. Tuscan, which handles a $50-million fund, has previously invested in LCL Logistix Pvt Ltd and Singapore-based RSI and is also eyeing real estate and education sectors.
The Tuscan-incubated venture, Cold Star Logistics Pvt Ltd, will become operational by end of 2010. While Tuscan will have representatives on the board, industry professionals will be hired for day-to-day operations. The company will have 15-18 cold storages in the country within a couple of years of operation.
Vishal Sharma, founder & managing director, Tuscan Ventures, told VCCircle, “The consumption pattern of Indians is changing dramatically. In the US and other western countries, processed food consumption is 85% of total food consumption, while in India, it is about 5%. However, the picture is getting changed due to the wide use of ready-to-eat food.”
As part of the plan to set up the venture, Tuscan has identified land in Ahmedabad, Delhi, Mumbai and Bangalore for setting up cold storages and has also finalised vendors. The transportation facility will also be owned by the company.
The logistics sector in India is seeing lot of deal action with the entry of global players such as Hitachi, which acquired Mumbai-based Flyjac Logistics in a Rs 250-crore deal. Apart from Hitach-Flyjac deal, nearly six M&A deals took place in the logistics space this year. Reliance Industries acquired minority stake in Deccan Cargo & Express, Aqua Logistics expanded global presence by acquiring Tag Logistics, CIT Logistics and AGI Logistics in China and Hong Kong while Nippon Yusen bought stake in TM International Logistics.
In the PE space, three deals took place where Reliance Venture Asset management with partners bought stake in Reverse Logistics ($8.8 mn), Mayfield and SIDBI Venture Capital together acquired stake in Fourcee Infrastructure Equipment Pvt Ltd ($10.98 mn) and IDFC India infrastructure Fund acquired stake in Karaikal Port Pvt Ltd ($15.72 mn).