TVS Logistics to acquire Tatas’ DIESL

Chennai: TVS Group company TVS Logistics Services Ltd (TVSL) on Tuesday said it will acquire Tata Group firm Drive India Enterprise Solutions Ltd (DIESL) in an all-cash deal.

The acquisition will be part-financed by Tata Opportunities Fund, a private equity fund from Tata Capital, which will pick up a minority stake in TVSL for Rs.250 crore.

TVS Logistics, however, did not disclose the value of the acquisition.

DIESL is a warehousing firm and TVSL handles transportation and material handling; therefore, the acquisition is a right fit, said R. Dinesh, managing director of TVSL.

The deal will be subject to regulatory clearances from the Competition Commission of India.

DIESL will retain its brand name, but whether it will continue to be separate company will be decided after the regulatory approvals, Dinesh said.

After the acquisition, the global revenue of the combined entity will touch about Rs.4,000 crore. Its India revenue mainly comes from its operations in the auto sector and stands at Rs.700 crore. Post acquisition, TVSL aims to diversify into sectors such beverages, information technology, health care, telecom and defence. Twelve-year-old warehousing solutions provider DIESL has 189 warehouses across India, with 6.5 million sq. ft of space.

In 2012, US private equity firm KKR and Co. Lp invested Rs.242.2 crore in TVSL for an undisclosed stake. Goldman Sachs Group Inc invested Rs.100 crore in 2008 in TVSL as initial fund raising and also invested another Rs.26.6 crore in the company along with KKR in 2012. Tata Opportunities Fund will be the third investor in the Chennai-based logistics company.

“The exit route for the private equity investors will be when TVSL goes for an initial public offering to the secondary market but I cannot comment when it will happen,” said Dinesh.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.