KKR, Goldman set for $250 million pullout from TVS Logistics

CHENNAI/MUMBAI: A large private equity transaction is in the offing at TVS Logistics Services as marquee investors KKR & Co and Goldman Sachs mull an exit from the newest subsidiary of the southern conglomerate TV Sundaram Iyengar & Sons. The two American investors have mandated JM Financial to sell their 44% stake in the Chennai-based logistics company in a deal estimated at $250 million, or around Rs 1,500 crore, people directly familiar with the matter said.

Carlyle, Bain Capital and GIC of Singapore are among the suitors bidding for the shares in what could be the biggest investment deal in India's fast-developing logistics sector. The secondary share sale process started after TVS Logistics pushed back plans for an initial public offer (IPO), originally expected to happen in the current calendar. The transaction could value the company at just below Rs 3,500 crore, sources added.

Dubai-based Abraaj Capital and US private equity major Advent International were other investors who had shown interest in the share sale process. Goldman Sachs has been an investor for eight years, while KKR bought into TVS Logistics three years ago.

The business was started initially to move various spare parts the TVS group companies produce to their customers globally, but has since diversified into a full-fledged logistics provider. R Dinesh, a member of the TVS family, grew this unit ground up with a string of acquisitions. Dinesh did not respond to calls and text messages seeking comments on the impending secondary share sale. When contacted, KKR declined to comment. Goldman Sachs could not be reached immediately.

TVS Logistics leveraged on the investments by KKR and Goldman Sachs to sew up acquisitions, beginning with UK's Multipart Holdings (renamed TVS Supply Chain Solutions) in 2009. Last year, it took controlling interest in Australian freight forwarding firm Transtar, which is present across the top 10 ports of the world. It had also acquired Drive India Enterprise Solutions from the Tatas last calendar. Tata Opportunities Fund is a small investor in TVS Logistics, which reported Rs 3,100-crore turnover in FY15.

There has been growing investor interest in logistics and warehousing service providers in the world's fastest expanding economy, to an extent driven by the boom in e-commerce shipments. The largest India-focused private equity firm Everstone Capital recently announced a $1-billion investment to roll up its Indian warehousing portfolio. Warburg Pincus have cut large cheques for logistics company Ecom Express and Continental Warehousing, among others, pegging its commitment to the sector at $500 million. Other investors include Fidelity International and Standard Chartered Private Equity.

Several conglomerates like TVS and Mahindra developed in-house logistics expertise to propel their core auto businesses, and have spun them off into independent businesses with external investors. The domestic logistics industry is estimated at $14 billion, and is projected to grow at 10% annually.