TVS Logistics Raising $53M From KKR, Goldman Sachs

Third-party logistics service provider TVS Logistics Services is raising Rs 268 crore ($53 million ) in a fresh round of private equity funding led by KKR. While KKR is investing Rs 242.4 crore (approximately $47 million), existing investor Goldman Sachs will bring in the rest as an add-on investment.

The TVS Group company had four years ago raised funding from Goldman Sachs and TVS Shriram Growth Fund. With this investment, TVS Shriram Growth Fund has exited the company in a transaction that also marks its maiden exit.

R Dinesh, managing director of TVS Logistics Services, said, “We decided to go for the second round of funding because we see the market potential and opportunity for us to expand and grow globally. The additional investment will allow TVS Logistics to continue its expansion both through acquisitions and organic growth. Besides growing with our existing customer base, we also look forward to our private equity investors Goldman Sachs and KKR helping us expand our capabilities and geographic footprint.”

S Ravichandran, executive director, TVS Logistics Services, said, “Within the Indian logistics sector, we focus on the auto and discrete manufacturing sectors. These industries are experiencing rapid growth driven by both domestic and export demand and currently have relatively low third-party logistics (3PL) penetration compared to their global peers. This funding will help us to service our customers even better.”

Over the last there years it has struck a few overseas acquisition deals as it aimed at hitting $500 million revenues by 2012. It acquired UK's Multipart Holding in November 2009 and followed it up with twin deal involving US-based logistics company MESCO and its American partner, Global Rush, in the joint venture TVS America.

“This investment is in line with our on-going strategy to partner with strong promoter groups and management teams in a sector which builds on and benefits from the Indian industrial uptick. Logistics consolidation in an otherwise fragmented industry and best in class supply chain management are clear areas where KKR, partnering with TVS Logistics, can add a lot of value,” said Sanjay Nayar, country head for KKR in India.

This is KKR’s first new portfolio investment since it invested in Kolkata-based public listed NBFC Magma Fincorp last year.

Sanjeev Mehra, managing director at Goldman Sachs and a director at TVS Logistics Services, said, “Since our initial investment in 2008, TVS Logistics has demonstrated strong growth and successfully expanded across the globe, acquiring new commercial capabilities and establishing footprints in key geographies to extend its reach throughout North America, Europe and Asia. Goldman Sachs’ additional investment in this second round of funding further verifies and symbolizes our conviction in the company’s strong future growth prospects.”

Kotak Mahindra Capital Company acted as exclusive financial advisor to TVS Logistics and JM Financial acted as exclusive financial advisor to KKR in the transaction.

This is the second PE deal in the logistics industry in 2012 and sixth over the past one year. Most recently General Atlantic invested $104 million to buy a stake in Fourcee Infrastructure Equipment Services. Prior to that India Equity Partners acquired the domestic road operations of Dutch freight & logistics giant TNT Express in India in one of the rare control deals in the Indian private equity market.

Last year Warburg Pincus had invested $100 million in Continental Warehousing.