Professional Documents
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Logistics Sector
Approach Note FY11
Overview of Indian Logistics Industry
Global Logistics Industry ~ USD 3.5 Tln (2008), India has small global footprint < 2% of the global industry
Overall Indian Logistics Spend is ~12-13% of GDP, while, Average in Developed Nations ~ 5-6%
Highly Fragmented - organized segment constitutes ~6% of total industry (projected to reach 12% by 2015)
Key Growth Drivers :
Rising EXIM
Emergence of Organized retail
Infra spending to GDP growth to rise from 5.0% in 2006-07 to 9.0% in 2011-12
Favorable Regulatory environment Open Sky Policy, Implementation of GST, Direct Freight Corridor, NMDP
Policy, Private Participation in Container Industry, FTWZ
Need for consolidation currently organized players largely cater to a specialized sub-segment
Outsourcing and global trade adding impetus to demand growth - Leading to emergence of Third party logistics
players (3PL) and Multimodal Transport Operators (MTO)
Logistics Industry (2008-09) INR 2.7 Trillion Logistics Industry (2013-14) INR 4.6 Trillion
11% CAGR
Indian Logistics Cost/GDP is higher than other developed economies this is a function of the prevailing Infrastructure,
regulatory framework, industry structure and historical practices followed in the industry
Globally, companies have realized that logistics can serve as an important differentiation tool and this has accelerated
the move to a more organized and integrated industry structure in India and towards a 3PL model
*Source: CRISIL
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Segmental Overview
Port Handling,
Sea Sea Freight CFS, FTWZ
C&F Agents
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Characteristics and Relevant Products
*Source - CRISIL
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Characteristics and Relevant Products
Arshiya Intl
Nature: Organized
M&A Apeejay Infra-
FTWZ/ EBITDA Margins:10-15%
30 JV Logistics
Logistics Park Capex: High
PE Shree
Drivers: GDP, GST
Rajlaxmi
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ISG Approach
Market Sizing & Deal flow mapping
Annual Transaction (incl. M&A, PE, IPO) value in the Logistics sector for the last 3 years is ~INR 8,000 Cr.
Assuming a 10% penetration, we estimate target market for deals to be ~INR 800 Cr. for FY11
Assuming 33% conversion into mandates, the deal pipeline for FY11 is estimated at ~INR 270 Cr.
Assuming 33% conversion of mandates into closure, the deal closure value for FY11 is estimated at ~INR 90 Cr.
Assuming 2.5% as success fee, we estimate ~INR 2.2 Cr. as revenue potential for FY11
Logistics 8 3 10 21
Proposed Positioning
Focus on Mid-market clients
Companies having a topline of INR 150 Cr. to INR 300 Cr. as PE targets
ECM related many companies in the sector have reached a size & scale for an IPO round
PE syndication given high growth trajectory of the sector, significant interest evinced by PE investors
M&A/JV few sectors are ripe for consolidation (eg, rail haulage, trucking, etc.)
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ISG Approach
Competitive Landscape
Company PE / M&A ECM
SBI Capital
ICICI Securities
IDFC Capital
Edelweiss Capital
Avendus
KPMG
E&Y
Kotak
Mape
Axis Bank
Equirus
Enam
In the Logistics space, major competition expected from the following :
Differentiation Strategy
Early mover advantage & Sector credentials Aqua Logistics, Aegis Logistics, Transpole Logistics, Inlogistics, etc.
Proactively tapping niche emerging areas warehousing, air express logistics, rail haulage, cold storage, etc.
Leveraging our integrated investment banking platform (i.e., from PE to IPO cycle) vis--vis other mid-market firms
(like Mape, Equirus, KPMG, etc.)
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ISG Approach
GST implementation
Warehousing Demand-Supply mismatch of quality warehousing; significant investments in
greenfield projects
Air freight currently constitutes only 0.05% of overall Logistics Sector and is poised
to grow
Air Express
Several private players (Deccan 360, Kingfisher Express) have forayed into the
segment with significant investment plans
Aggressive bidding for Rail Licences by private players imply longer payback
Rail Freight / ICD periods which is becoming unsustainable for several bidders
Segment is expected to witness significant consolidation in the near future
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ISG Approach
Logistics Mandates & Pipeline
Transpole Logistics Raising PE of upto INR 60 crs
Aegis Logistics Enhancing shareholder value exercise, leading to QIP issue of upto INR 100 crs.
Indo Arya Logistics Raising equity through IPO of upto INR 150 crs
Business Development
Mapped a list of 50-60 companies, alongwith their growth plans and potential opportunity for Centrum
Mergermarkets
Crisil
Projects Today
Leveraging networks, i.e., Centrum fraternity and industry associates (CAs, advisors)
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Select Opportunity Mapping
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Select Opportunity Mapping
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Recent Deals
Relevant
Sub-Segments Recent Deals
Products
Toll Holding acquired 40% stake in BIC Logistics with option of acquiring
M&A
Trucking majority stake in 2 years (05/09)
JV
ICICI acquired Transafes 50% stake in JV with Balmer Lawrie (09/09)
LTL/FTL PE/PIPE AFL Logistics acquired Unifreight for INR 55 crs (08/08)
M&A
Ambit Pragma acquired over 30% in Spear Logistics , which deals in contract
Warehousing JV
warehousing, for INR 25-50crs
PE/PIPE
Temasek acquired a 10% stake in GDL(06/04) which later had an IPO (03/05)
CFS / ICD PE/PIPE
Blackstone invested INR 320 crs in 11/09
Gati acquired additional 26% stake in Kausar India to raise stake to 99.73%
Cold Storage PE/PIPE (04/09)
IFC invested INR 25 crs in Snowman Frozen Foods
M&A
Eredene Capital invested INR 42 crs in Apeejay Infra Logistics to develop
FTWZ & Logistics Park JV
Logistics Park in Haldia, WB (06/07)
PE
M&A India Value Fund acquired 51% stake in Inlogistics for INR 200 crs (04/09)
CTO (Rail freight)
JV
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Recent Deals
Relevant
Sub-Segments Recent Deals
Products
PE/PIPE
Sea Freight NYK acquired 26% stake in TMIL for (03/10)
M&A
RIL acquired majority stake in Deccan 360 for INR 100-150 crs
PE
(04/10)
Air freight M&A
Geopost Intercontinental acquired 60% of Continental Air Express for
JV
INR 5 crs (01/08)
PE/PIPE Hitachi acquired Flyjac Logistics for INR 250 crs (03/10)
Multimodal Freight
M&A TCI acquired RILs stake in Infinite Logistics for INR 1 cr (03/10)
Forwarding
JV New Vernon invested INR 60crs in Allcargo for 6% (01/06)
PE/PIPE Aqua Logistics acquired AGI Logistics, CIT Logistics and TAG
3PL M&A Logistics (03/10)
JV SIDBI VC invested INR 10crs in Direct Logistics (03/06)
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Thank You
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