PE funds step up logistics play on retail FDI hopes.

At a time when the government has renewed efforts to build a consensus on multi-brand retail FDI, private equity investors are stepping up investments in the logistics sector, seen as a key gainer if the policy gets through.

The latest in the series of deals is an investment by US-based General Atlantic LLC, which manages approximately $17 billion in capital globally, in bulk logistics solutions provider Fourcee Infrastructure Equipment Pvt Ltd. While the exact investment amount was undisclosed, General Atlantic would become a minority shareholder in the company and join the board of directors.

“Logistics and transportation for important products are key strategic elements for India’s infrastructure development and continued growth,” said Ranjit Pandit, managing director at General Atlantic, who will be joining the board of Fourcee.

The deals comes on the heels of a number of big-ticket transactions in the logistics space in recent months, mainly in anticipation that the opening up of the retail market to foreign players would place logistics firms in good stead.

Chennai-based TVS Logistics Services Ltd is also said to be in talks with private equity investors for a second round of funding. In December 2011, New York-based private equity fund, India Equity Partners (IEP), had acquired the road operations of Dutch freight major TNT Express in India.

IEP had earlier picked a significant minority stake in Gwalior-based Swastik Roadlines Pvt Ltd, a food cargo supply chain service provider.

Earlier during the year, Warburg Pincus had struck one of the biggest PE deal in the domestic logistics space with $100 million investment in Chennai-based logistics firm Continental Warehousing Corporation (Nhava Seva) Ltd, a subsidiary of the NDR Group.

Other high-profile deals in the recent past include an investment of $10 million by Ashmore Alchemy Investment Advisors in Siesta Logistics Corp Ltd and Blackstone’s investment in Allcargo Logistics. Mayfield Fund and Sidbi Venture Capital Ltd too had earlier invested $11 million in Fourcee Infrastructure Equipment Pvt Ltd, with another $10 million coming from IEP subsequently.

According to a recent Cushman & Wakefield report, the Indian logistics industry is expected to grow at 15-20 per cent annually, touching revenues of $385 billion by 2015. The report states that by 2012, around 110 logistics parks spread over 3,500 acres, are expected to come up across the country at an estimated cost of $1 billion.

While plans to usher in FDI in multi-brand retail had been put on the backburner on account of opposition from key UPA allies, industry experts see the logistics sector to be a big gainer as and when a decision to push through the reform move is taken. The Commerce Ministry has now renewed efforts to build a consensus with states on the issue.

Source : indianexpress.com