Business models feeding on the Indian consumption story continue to find favour with the venture capital community.
Central Parking Services Pvt Ltd, a Bangalore-based parking management company with presence in 21 cities across India, is in advanced discussions to raise $5 million from VentureEast, an early stage fund focussed on technology, life sciences and emerging sectors.
CPS is handling 1.5 lakh cars and bikes per day by managing over 30,000 bays across airports, hospitals, shopping malls, corporates offices and standalone parking slots. The firm, which stakes claim as the country's largest parking management entity, was founded by first generation entrepreneur N Satyanarayanan.
Chennai-based Spark Capital is advising CPS on fundraising. VentureEast has issued a term-sheet to the company on the proposed investment but the deal has not been closed, sources directly familiar with the matter said.
When contacted, Mr Satyanarayanan declined to comment. Email to VentureEast remained unanswered at the time of publishing this report.
CPS counts Mumbai International Airport Ltd, Bangalore International Airport Ltd, Delhi International Airport (Terminal-2), Apollo Hospitals, Select Citywalk Mall (in Delhi), UB City (in Bangalore) Atria Mall (in Mumbai), GVKOne Mall (In Hyderabad) and Mani Square in Kolkata among some of its clients.
Parking facility management is slowly becoming mainstream and gaining currency as a core urban infrastructure requirement particularly in large public utility spaces such as airports, malls and offices. Parking facility management, however, continues to be largely unorganised even today and some estimates peg the market size at over Rs 700 crore conservatively.
CPS offers end-to-end solutions from design stage to implementation of parking management systems and manning and maintaining the facility. An industry expert, requesting anonymity, said, “The firm enjoys multi-year engagements with clients resulting in steady revenue streams. That would be attracting a lot of investor interest in an asset like this.”
There are others who argue that while CPS operates in an interesting segment, it is also fraught with scalability challenges especially in a heavily fragmented market. "Scalability model must be asset backed expansion than through service offerings," said a source in the venture capital industry who did not wish to be quoted.
"The firm would possibly grow by developing own parking structures and taking over and overhauling existing parking slots. It has attempted to expand the service portfolio with technology enabled offerings, such as coming up with traffic management solutions considering the data it possesses. But the potential in this direction has to be demonstrated," this source added.
Parking services today constitute a very core part of user experience and customer delight particularly in the retail scenario. With favourable demographics, high disposable incomes, and recovery in buying sentiments, developers are back to focus on their retail portfolio after a lull period in the aftermath of the world’s worst slowdown, said a real estate expert. And, this should augur well for a firm like Central Parking Services, which counts the retail segment as one of its biggest business drivers.
Ventureast launched its eighth fund, VenturEast Life Fund III LLC, focusing on high-growth small and medium enterprises (SMEs), early last year. The firm raised $150 million early–to–growth stage VenturEast Proactive fund and $18 million incubation fund Ventureast TeNet II in 2007.