India's Kedaara seals debut deal
India-focused GP Kedaara Capital has made its first investment, taking a 23% stake in Mahindra Logistics for INR2 billion ($32.7 million).
The company, which is part of the $16.2 billion Mahindra Group, will use the capital to make strategic acquisitions and expand its business. According to Live Mint, upcoming acquisitions include a small freight forwarding company and two or three warehousing companies. The mail and freight courier business is also being targeted.
Kedaara will nominate two members to the Mahindra Logistics board.
The company was set up in 2000 to serve the transportation needs of Mahindra Group's automotive business and went on to serve third-party clients across the consumer, telecom, financial services IT and infrastructure sectors. The parent directly or indirectly accounts for 70% of business but Mahindra Logistics wants to reduce this to 50%.
The company is also seeking to grow revenues from INR17.5 billion for the current financial year to INR60 billion by 2020. An IPO is slated for 2017.
Mahindra Logistics is part of Mahindra Partners, described as the parent company's $750 million private equity division. Its remit is to create value through a diversified portfolio of emergent businesses. Other investee companies operate in the cleantech, steel, retail, education, media and consulting sectors.
Mahindra Group identified logistics as a key focus area in 2009. McKinsey & Company estimates that logistics inefficiencies cost the Indian economy about $45 billion every year and the traffic burden placed on the existing infrastructure is only going to increase.
Kedaara was founded at the end of 2011 by Manish Kejriwal, formerly India head for Temasek Holdings, Sunish Sharma, formerly managing direct at General Atlantic, and Nishant Sharma, formerly of General Atlantic and McKinsey & Company. They sealed a partnership with Clayton, Dubilier & Rice (CD&R) in March 2012 and launched the fund about two months later.
A first close came in October 2012 and a final close of $540 million followed in November of last year.
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