Deal focus: CDPQ takes logistics leap with TVS

For Caisse de Dépôt et Placement du Québec (CDPQ), the chance to get involved in India's growing logistics sector was attractive enough.

So when KKR and Goldman Sachs came looking for a buyer for their stake in TVS Logistics, a privately held subsidiary of TVS Group, the Canadian pension plan knew it had found exactly what it was looking for. Not only was it an opportunity to get exposure to one of the industry's most prominent providers, but the company's culture was a good match as well.

"They had already a track record of making some acquisitions. What interested us very much was that none of the key people from these companies had left, and they were being integrated into the overall TVS Logistics family in a very good way," says Anita Marangoly George, head of India for CDPQ. "It was not just the business needs that were being catered to, but also the human element - people within these companies feeling that TVS was actually adding value rather than just taking them over."

CDPQ had been looking to invest in businesses with long-term growth prospects since opening its India office earlier this year. The pension fund considered India one of its five most promising growth markets and wanted to be near the ground to capitalize on investments as soon as possible.

With a highly selective investment plan, CDPQ put a high emphasis on finding companies with the right management team and taking a partnership approach. TVS Logistics seemed like the perfect candidate, not only due to its positive internal culture but also because of its focus on providing the best service.

"One point that we liked really about TVS was that it's very customer-focused, and it's looking more at, not which sub-sector of logistics they fit into, but rather how can they service their customers the best, regardless of where the customer is," says George. "In addition, TVS has positioned itself as an Indian multinational, so even though it has a base in India, we see it as part of the global economy."

Having identified the opportunity CDPQ went ahead with the investment, paying INR10 billion ($155 million) for the majority of KKR and Goldman's stake. TVS family members and management took the rest of the two firms' shares. The acquisition gave CDPQ a 70% holding in the company. Now CDPQ plans to use its resources, both in capital and in global logistics experience and connections to help TVS Logistics grow into a global power. George notes that the company's customer-centric focus is already beginning to bear fruit.

"I think this is already starting to take shape - for example, customers who they acquired in one market are now moving with TVS to other markets," she adds. "So I think that's kind of proof of the thesis that once they provide good services in one market, they can grow with their customers to address other markets as well."

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• Topics
• South Asia
• Support services
• Buyouts
• India
• Caisse de depot et placement du Quebec (CDPQ)
• Logistics