Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) has agreed to invest $155 million (more than Rs 1,000 crore) to acquire a significant minority stake in Chennai-based TVS Logistics Services Ltd in a transaction that will also give an exit to Goldman Sachs and KKR.
CDPQ will purchase most of the stake held by Goldman and KKR while TVS family members and management will acquire the remainder, the Indian company said in a statement on Wednesday.
This is the second major announcement involving CDPQ in India this month, after it signed an agreement with Edelweiss Group to invest about Rs 5,000 crore over four years in stressed assets .
The Canadian firm had opened its India office only this year, in March , and the deals suggest it has quickly got down to business.
TVS Logistics, part of the Chennai-based automotive group TVS, didn’t disclose the stake CDPQ will hold when the transaction closes or the amount the TVS family will invest to acquire part of the stake owned by Goldman Sachs and KKR.
However, a person close to the transaction said on the condition of anonymity that the TVS family and management will spend about Rs 200 crore to acquire the stake. A second person close to the transaction said CDPQ will hold around 40% of the Indian company.
Goldman Sachs had first invested in TVS Logistics about eight years and put more money in 2012 in a round led by KKR .
The TVS statement said also that CDPQ will commit further capital for the company’s expansion in the future, which could include acquisitions.
“Efficiency in delivering goods to customers is a key driver of business performance. TVS Logistics is well positioned to seize growth opportunities resulting from recent tax reforms in India and global demand for state-of-the-art logistics services,†said Michael Sabia, president and CEO of CDPQ.
CDPQ manages funds primarily for public and para-public pension and insurance plans. As on 30 June, 2016, it held $254.9 billion in net assets with investments in financial markets, private equity, infrastructure and real estate.
The transaction needs board approval and the Competition Commission of India's clearance.
JM Financial was the financial adviser for this deal while AZB was the legal adviser to KKR and Goldman Sachs. Law firm Cyril Amarchand advised CDPQ and J Sagar Associates advised TVS Logistics.
TVS Logistics' growth
Founded in 1995, the firm offers transportation services such as inbound and outbound logistics, warehouse management, freight management, defence logistics solutions and materials management services, according to its website.
The company reported net sales of Rs 312 crore for the financial year 2014-15, as per VCCEdge, the data research platform of News Corp VCCircle. Its latest financials could not be ascertained.
R Dinesh, managing director at TVS Logistics, said the firm has grown at compounded annual pace of more than 30% both organically and through acquisitions.
The firm has made at least 14 acquisitions.
After KKR invested in TVS Logistics, the firm in 2013 acquired an 85% stake in the UK-based Rico Logistics Ltd for $18.5 million (Rs 100 crore then), as per VCCEdge.
Some of its other deals include acquiring a 51% stake in TVS America for an undisclosed amount from its joint venture partner Global Rush LLC in 2011 and acquisition of the UK-based Multipart Holdings Ltd for an undisclosed amount from Aviva Plc in 2008.
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