Kerala Transport Co. (KTC) Group plans to raise about Rs100-150 crore by selling a minority stake in its logistics division, according to two people aware of the development.
The group has appointed a Chennai-based investment bank to find a buyer, one of the two people cited above said on condition of anonymity.
“The logistics business of KTC Group is valued at around Rs550-600 crore,” said the second person. An email sent on Friday to P.V. Chandran, chairman of KTC Group, remained unanswered.
The group is now run by founder P.V. Sami’s sons—P.V. Chandran, P.V. Gangadharan —and grandson P.V. Nidhish.
Established in 1958, KTC Group is among the top five road transporters in India with a fleet of over 1,000 trucks and 75 buses. It also has a presence in healthcare, property development, plantations, software, publishing, education, food processing, film production, and automobile distribution. The logistics business is the biggest contributor to KTC Group’s overall Rs400 crore annual revenue for FY16.
The group also holds a significant stake in Mathrubhumi Printing and Publishing Co. Ltd, publishers of the Malayalam newspaper Mathrubhumi.
The logistics and warehouse market in India is expected to reach $200 billion in 2020 from $110 billion in 2014, according to a August 2015 report by Jones Lang LaSalle Property Consultants (India).
The growth story of the Indian warehousing and logistics sector has lured foreign investors and private equity firms in recent times.
“Further, conducive policy environment, such as the allowance of 100% foreign direct investment (FDI) in warehouses and food storage facilities under automatic routes and tax-free zones such as free trade warehousing zones, has attracted many foreign and private equity investments in the sector in last few years,” the report said.
In October, Caisse de dépôt et placement du Québec (CDPQ), Canada’s second-largest pension fund, invested Rs1,000 crore to buy a minority stake in TVS Logistics Services Ltd. CDPQ purchased most of the shares owned by Goldman Sachs, KKR, and TVS family members.
US-based PE fund Warburg Pincus Llc invested about Rs1,500 crore last year in companies like Embassy Group and ECom Express, a logistics solutions providers to the e-commerce industry.
“In India, export/import (EXIM) cargo, agriculture and manufacturing (textiles, auto and auto ancillary) have been identified as the traditional growth drivers to the demand for warehouse space,” said the Jones Lang LaSalle report. “Meanwhile, new growth drivers like organized retail, information technology, telecommunications and healthcare can be considered as high-potential sectors. The growth these drivers bring, coupled with the advent of technological advancements, is likely to boost demand for organized and automated warehouses going forward.”
Recent Articles on M&A
Source: Mint
