KKR, Goldman back Indian logistics provider

The local company ensures that everything from wing mirrors to windscreen wipers reach Ford's factories at the required time, enabling the US car manufacturer to minimize its warehousing costs. Similar just-in-time services - which involve scrutinizing customers' planning schedules and coming up with the best supply chain routing - are delivered to the likes of Ford, Renault, Nissan, Hyundai and Toyota.

KKR and Goldman Sachs invested $53 million in TVS last week, seeing the company as a proxy for the rise of India's auto sector. "India has become a global manufacturing hub for small cars," a source familiar with the deal tells AVCJ. "Ford has a strong presence here and Hyundai manufactures all of its small cars here and exports them globally. Production of commercial vehicles and the auto component export business are both growing strongly."

KKR's contribution is $47 million, while Goldman is putting in $6 million, topping up its existing investment in the company. In 2008, Goldman and TVS Capital, a unit linked to TVS Group, reportedly committed $25 million, with Goldman putting in most of the money. KKR's entry has facilitated TVS Capital's exit, leaving the two remaining private equity investors with about 40% of TVS Logistics. The firm is targeting revenues of $300 million for the current financial year.

According to AVCJ's source, KKR's involvement stems from Heramb Hajarnavis, who joined the firm from Goldman Sachs in 2010. Hajarnavis led Goldman's original investment in KVS and sits on the company's board.
Commenting on the deal, Sanjay Nayar, head of KKR India, notes that bringing about consolidation in the country's fragmented logistics sector represents a big opportunity for the private equity firm.

India's broad logistics sector is worth about $150 billion, or 13% of the country's GDP. Within that, the organized logistics segment is worth $30-50 billion and outsourced logistics services in particular are growing 20% year-on-year. About 85% of India's trucking fleet is controlled by companies with fewer than five vehicles each.

TVS is an anomaly in that it is asset-light, leasing trucks and other equipment as it requires them. TVS' approach to M&A - the new capital will be used to expand the business through organic growth and acquisitions - also differs from that of its peers, reflecting the company's desire to develop as an industry specialist with a strong export focus.

Past acquisitions include Multipart, a warehouse management company in the UK, and Mesco, a US firm that transports tool and die sets used in auto manufacturing from factory to assembly line. "It's all about importing expertise back into India," the source adds.

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• Topics
• Expansion
• South Asia
• Industrials
• India
• Industrial Technology Investment
• KKR
• Goldman Sachs
• Growth capital