Everstone bets on India's logistics space

"We essentially want to help the company strengthen its trade links and logistics infrastructure, which means setting up more offices and infrastructure and building the customer base," explains Dhanpal Jhaveri, CEO and partner at Everstone. "We will also assist Transpole in their inorganic growth opportunities through acquisition of businesses which we believe fit well within the company's core strategy." 

Rival private equity firms are seeking similar outcomes with other companies - KKR offered a similar investment rationale for its $47 million commitment to TVS Logistics last year - and this goes some way to explaining the level of interest in the sector. According to AVCJ Research, India is one of the most active countries in the region when it comes to transportation and distribution: About one third of the $1.8 billion invested in the sector region-wide last year went to India.

The other attraction is growth. On a gross revenue basis, the value of India's freight forwarding industry was estimated at INR450 billion ($ 8billion) in 2012, and it is expected to reach INR750 billion by 2016.
"We have always liked freight forwarding logistics sector because it is an asset light model," says Jhaveri. "There are a lot of businesses in this industry that are asset intensive, such as shipping and trucking companies. What we like about the Transpole model is really that they are providing end-to-end logistics and they have the scale for a lot of efficiencies in the business."

Transpole's services range from freight forwarding to warehousing and distribution, and it has built out a strong presence across the region with 540 employees based in 18 offices in India as well as locations in Singapore, Malaysia, Hong Kong, South Korea and China. The company has achieved compound annual growth of more than 60% over the last five years.
Jhaveri says the new funding will enable Transpole to expand its operations in India and overseas. He notes that there is opportunities are increasing for such companies as customers seek out more sophisticated forms of supply chain management.

Everstone is not the first PE firm to recognize the Transpole's potential - Fidelity Growth Partners invested $13.5 million two years ago - and it moved fast to secure the transaction, agreeing the invest five months after identifying the company as a potential target. The investment was made through Everstone Partners II, a 2009 vintage vehicle which reached its final close of $580 million in 2011 and is now around 40% deployed.

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• Topics
• Investments
• South Asia
• Industrials
• Everstone Capital
• India