PE Firm India Equity Partners acquires TNT Express' Domestic Road Business

Private equity firm India Equity Partners ("IEP") based in Mauritius, through its Logistics subsidiary has acquired the domestic road express business of TNT India ("TNT Express"). The sale, which took effect on 30 December 2011, was sourced on a proprietary basis leveraging unique access through Mr. Abhik Mitra (IEP's Platform CEO for the Logistics sector) and IEP's global relationships. This new entity will be led by Abhik Mitra, previously Managing Director of TNT India.

TNT's domestic road express business is one of the top four competitors in the sector with an outstanding reputation for reliability, customer service and its service offerings. The business has a strong network, resulting in a well-known and diversified list of customers, which includes global players as well as large and medium-sized domestic companies. The addressable market that the acquired road express business serves is the fastest growing segment in the Indian logistics sector, which grew at over 20% last year and was estimated to be Rs. 21 billion in 2010. The industry is highly consolidated with only four competitors comprising 50% of the market due to the significant barriers to entry as a result of large investments required to build scale and the high fixed costs of running a scheduled network.

Mr. Sid Khanna, Chairman and Managing Director of IEP Fund Advisors, commenting on the acquisition said, "IEP is excited by this acquisition and it is consistent with our strategy of investing in Logistics and Infrastructure Services. In the Logistics sector, we see tremendous growth opportunities for mid-sized companies with the required management and capital, to scale rapidly and become market leaders."

Mr. KK Iyer, Managing Director of IEP Fund Advisors, who previously led Accenture's logistics practice in India, said "This investment is consistent with IEP's differentiated investment strategy of control platform investments and portfolio value-add. IEP brings together outstanding management talent, the necessary financial capital, high quality governance and best-in-class management processes to build platforms that acquire companies to drive growth and become market leaders. We see TNT's domestic road express business as a first step in building out our Logistics platform and intend to pursue other exciting investment opportunities in this sector."

IEP is uniquely positioned to build and grow companies in the Logistics sector due to its team's strong operational experience in the sector and strong consulting and transformation experience, along with sector insight and exposure through its three existing portfolio companies across different segments of the Logistics sector. These are Fourcee Infrastructure - a niche liquid logistics rail transportation company, which grew over 100% over the previous fiscal year; Swastik Roadlines (Coldex) - India's leading cold chain surface transportation company, which grew 40% over the previous fiscal year; and Ocean Sparkle - one of India's largest private harbor and seaport management services providers, which grew at 30% over the previous fiscal year.

IEP and TNT will work together to ensure a seamless transition. The senior management and most employees of TNT's road express business will move to the new IEP entity. This entity will become TNT Express' preferred partner for domestic road delivery in India. With Abhik Mitra's experience from his previous leadership role at TNT and the senior management team's extensive road express experience, the team is well positioned to lead the business going forward. IEP aims to build the domestic road express business through aggressive and profitable growth, to be become a market leader by focusing on service quality, customer orientation, improved revenue quality and volume growth.

Source : Equity Bulls

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