India's Tata Opportunities Fund is to acquire a minority stake in TVS Logistics Services Ltd (TVS LSL) to finance the company's acquisition of another Indian logistics entity Drive India Enterprise Solutions Ltd (DIESL).
The acquisition of DIESL is subject to Competition Commission of India and other regulatory approvals.
DIESL was established in 2003 as a 50:50 joint venture between Tata International and Tata Industries. The company operates more than 180 warehouses primarily in North and Eastern India serving mainly the consumer products sector. It reported full-year 2014-2015 revenues of more than $150 million.
TVS LSL is part of TVS Group, which specialises in supplying automotive components and has a combined annual turnover of $6.5 billion. The logistics company has offices in eight countries and operates in more than 50, including the US, UK, Europe and South East Asia, as well as India. It reported revenues of more than $500 million for the financial year 2014-2015. The acquisition of DIESL is expected to further diversify its domestic focus beyond servicing the automotive sector.
Managing partner of Tata Opportunities Fund's advisory team in India, Padmanabh Sinha, said, “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 [third party logistics] companies offering world class solutions.”
Tata Capital is advising the fund, which has a mandate is to invest into or alongside other entities in the Tata group, as well as other Indian business, through growth capital or buy-outs.
The fund announced its final close in 2013 with commitments totalling $600 million, of which it has invested $340 million across sectors including hospitality, manufacturing, satellite television and real estate.