INDIA & MIDDLE EAST: Rekindled interest in Indian logistics investment

Private equity firms are looking for investment opportunities in Indian logistics companies once again, after a brief lull due to a mismatch in valuations, according to a report in the Wall Street Journal. Private equity firms, previously, were looking at deals of at least US$50 million while smaller logistics companies were interested in smaller deals […]


Private equity firms are looking for investment opportunities in Indian logistics companies once again, after a brief lull due to a mismatch in valuations, according to a report in the Wall Street Journal. Private equity firms, previously, were looking at deals of at least US$50 million while smaller logistics companies were interested in smaller deals valued at $20 million or less. “A good number of deals in the sector concluded in the (current) financial year, and a healthy number of deals are in the pipeline, reflective of the strong private equity interest in the sector,” said Manish Saigal, executive director and national industry head of transportation and logistics at KPMG India Pvt Ltd. An added incentive for investors, he noted, was the announcement by Finance Minister Pranab Mukherjee, who unveiled plans for 15 or more mega-food parks in the country. The government also extended infrastructure status to storage and transportation facilities, in addition to the mega parks, making these a lucrative investment option. “Many logistics players are now expanding into cold chain, so the opportunities to invest are increasing,” said Vishal Sharma, founder and CEO, Tuscan Ventures Pvt Ltd, a private equity firm focused on logistics, citing examples of companies such as Transport Corp. of India and Gati Ltd that are expanding into cold-chain storage and distribution. Investors also attribute the increased interest to the fact that logistics players have realised that they can’t be just transporters, and therefore, are becoming less asset heavy and offering more services. “These companies have begun to move towards providing third-party logistics,” said Shruti Gupta, vice president, Tano India Advisors Pvt Ltd, a private equity firm. At least half-a-dozen logistics companies involved in third-party logistics and cold-chain storage and distribution told Mint that they were in talks with private equity investors for a possible dilution over the next three to six months.