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JM Baxi Group in talks with PE funds to raise US$150-200 million

Livemint:  March 10, 2016

Mumbai: Logistics firm JM Baxi Group has started talks with private equity funds to raise $150-200 million (Rs.1,000-1,300 crore), according to two people aware of the development.

“The group initiated the fund-raising process last month and is in early stages of discussions with several funds,” said one of the persons mentioned above, requesting anonymity as he is not authorised to speak to the media.

The Mumbai-based group has hired investment banking firm Avendus Capital to manage the process, he added.

The group, which started operations in 1916, has over the years diversified into several businesses such as logistics services, cold chain storage, handling cargo terminal at ports and managing inland container depots (ICDs).

“The group plans to invest the funds in its asset-heavy businesses such as port terminals and container handling facilities such as ICDs, which are housed under a separate business,” said the second person quoted above, also requesting anonymity.

The port terminals and ICD businesses are housed under a group company called International Cargo Terminals and Infrastructure Pvt. Ltd, earlier known as United Liner Agencies of (India) Pvt. Ltd.

JM Baxi is currently developing its presence at around five to six major ports in the country, he said. “Eventually it plans to expand its presence across all major ports in India. The funds will be used for the development/enhancement of existing facilities as well as for new terminals that they are looking at developing in other ports,” he added.

The firm operates cargo terminals at Mumbai’s Jawarharlal Nehru Port, Visakhapatnam port, Rozi port near Jamnagar, Haldia and Paradip ports. It also operates an inland container depot at Sonipat, Haryana.

Several e-mails sent to Dhruv K. Kotak and Vir K. Kotak, joint managing directors at JM Baxi Group, did not elicit any response.

According to International Cargo Terminals’ filings with the registrar of companies (RoC), the company reported consolidated revenue of Rs.298.5 crore in financial year 2013-14 and a profit of Rs.22.4 crore. Latest consolidated financial numbers of the firm were not available.

In 2012, IDFC Alternatives, the asset management arm of infrastructure-focused lender IDFC Ltd, invested Rs.190 crore in the company through its India Infrastructure Fund.

Logistics has remained an attractive sector for PE investments as it is considered a proxy for overall economic growth. In the past five years, the logistics space has seen private investments worth around $1.17 billion across 74 investments, according to data from VCCEdge, the financial research platform of VCCircle.com.

In 2015 alone, $418 million was invested in the sector, driven primarily by the e-commerce boom, data shows.

Last month, PE fund Asia Climate Partners announced that it is picking up a stake in cold chain logistics firm ColdEX Logistics Pvt. Ltd. In July, Mint reported that Continental Warehousing Corporation (Nhava Seva) Ltd, a logistics company backed by private equity firm Warburg Pincus, was in talks with PE funds to raise up to $100 million.

The fund-raising and expansion plans of JM Baxi Group comes at a time when finance minister Arun Jaitley, in his Union budget speech, announced that the total government capital expenditure on infrastructure during the fiscal will be Rs.221,246 crore, he said.

Jaitley also said that the government is planning to develop new greenfield ports, both on the eastern and western coasts of the country.

“Given the fact that in the budget, approximately Rs.97,000 crore has been allotted to the development of the road sector alone and also the fact that a lot of emphasis has been put in for better connectivity of ports with roads and railways, there is an opportunity for faster movement of materials that will bring more efficiency in the logistics sector, that too at a cheaper cost,” said Manish Begrajka, executive director at investment banking firm Euromax Capital.

The government has also initiated work on its ambitious Sagarmala programme, which is aimed at promoting port-led development in the country.

More than 150 projects have been identified as part of a national perspective plan under the Sagarmala programme. The projects will mobilise more than Rs.4 lakh crore of investment in the next 10 years.

These projects have been identified across the areas of port modernisation and new port development, port connectivity enhancement and port-led industrial development.

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