CDPQ picks up TVS Logistics stake from KKR, Goldman

The Canadian pension fund’s $155m investment will be used to further the company’s expansion plans in India and abroad.

KKR and Goldman Sachs have agreed to offload their stake in Indian third-party logistics services provider TVS Logistics to Canadian pension Caisse de dépôt et placement du Québec (CDPQ), according to a statement.

CDPQ is acquiring a sizeable minority stake in TVS Group for INR 1,000 crores ($155 million; €141 million). The Canadian pension will purchase most of KKR and Goldman’s joint stake, while TVS founders and management will acquire the remainder.

The transaction is subject to approval by the Competition Commission of India (CCI).

KKR invested about $47 million in TVS in April 2012 from its first Asia buyout fund, KKR Asian Fund, which closed on $4 billion in 2007 and is almost fully liquidated, according to PEI data.

Goldman Sachs, which has deployed more than $2 billion in India since 2006, invested in TVS in two tranches, initially committing an undisclosed sum in 2008 followed by an add-on investment in 2012.

TVS Logistics provides end-to-end logistics solutions across automobile, beverages, IT, healthcare, telecom, retail, fast-moving consumer goods, and defence. The company is present in 14 countries and has 15,000 workers employees.

Since 2012, TVS has grown at a compound annual growth rate of more than 30 percent and has expanded its service offerings and capabilities, including last mile delivery, demand forecasting and technology logistics.

TVS has significantly internationalised its operations with much of its 2016 EBITDA now generated abroad, specifically in mature markets such as the US, UK and Europe, according to a source familiar with the matter. The person added that KKR assisted in areas of business growth, talent development and strategic business decision making.

The company has made several add-on acquisitions in recent years, including UK-based Multipart Holdings and Rico Logistics, as well as Australian freight forwarding firm Transtar and Tata-controlled Drive India Enterprise Solutions.

Its UK business has grown sevenfold in the last five years from £40 million to £275 million, making the company one of the largest Indian employers in Northern England, with more than 3,500 employees in the UK and in Europe. In the USA, it operates through seven facilities with more than 800 employees, the statement said.

CDPQ, which as of June 2016 has more than C$ 254.9 billion ($194.6 billion; €176.8 billion) in net assets, opened an office in New Delhi in March 2016 and appointed former World Bank senior executive Anita Marangoly George as its new managing director for South Asia. It also announced it will invest $150 million in renewable energy in India in the next three to four years, the first time it will commit to renewable energy companies in an emerging market.

Earlier this month, the pension agreed to acquire close to 30 percent in asset reconstruction company Edelweiss for about INR 5,000 crores to invest in stressed assets and private debt opportunities in India.

KKR, with $131 billion of assets, has stepped up its activities in India during the last 12 months. The firm has announced partial or full exits of investments in Dalmia Cement, Alliance Tire Group, and Gland Pharma. It has also made investments in local bank Avendus Capital, Emerald Media, and Max Financial.