CDC bets more on Indian logistics firm in rare follow-on investment

 CDC bets more on Indian logistics firm in rare follow-on investment

CDC Group Plc, the UK government’s development finance institution, will invest additional capital in an Indian third-party logistics company that is also backed by US private equity giant Warburg Pincus.

The British firm will invest about $20-21 million (Rs 145-152 crore) to buy an additional stake in Ecom Express Pvt Ltd, two people aware of the matter told The Capital Quest.

CDC, which offers long-term growth capital to private businesses in developing countries, had first invested about $36 million (Rs 255.36 crore) in Ecom Express in December 2019. While the deal details were not disclosed, CDC had reportedly acquired a single-digit stake in the company.

The fresh equity infusion will help Ecom Express drive several initiatives to support its growth plans. These include investment in automation, data sciences and technology to enhance service quality and efficiency across delivery processes. The company also aims to expand its product offerings in express logistics and fulfilment services.

CDC didn’t immediately respond to an email query seeking additional details on the investment.

CDC’s investment closely follows a large investment announced by Swiss-based investment firm the Partners Group in Ecom Express two months ago. The Baar, Switzerland-based multinational PE firm had agreed to invest $250 million for a “significant stake” in the logistics company.

Ecom Express and Partners Group didn’t disclose all details of the transaction. However, the Swiss firm bought part of Warburg’s stake and became an equal shareholder in Ecom Express.

Ecom Express was incorporated in August 2012 by TA Krishnan, Manju Dhawan, K Satyanarayana and Sanjeev Saxena. It has presence in more than 2,650 Indian cities and covers more than 27,000 postal codes. The company claims 1 million shipments every day through its 2,800 delivery centres.

US-based Warburg first committed to invest $133 million (Rs 850 crore then) in Ecom Express in 2015. In 2017, it invested an additional $30 million (Rs 200 crore).

Ecom Express had received initial funding from Oliphans Capital, which specialises in early-stage investments, in 2013. The following year, it raised around Rs 100 crore from India-focussed PE firm Peepul Capital.

CDC’s India exposure

The development finance institution makes both direct investments in companies and also supports PE and venture capital funds. It has struck more than 300 investments in India with nearly $2 billion in fund infusion.

In 2019, the investment firm said it wanted to double its India’s exposure to $3-3.5 billion, according to a report by the Mint newspaper.

While CDC has struck several investments in the country, it has made very few additional investments in portfolio companies including Ecom Express.

CDC’s other marquee investments in the country include Mumbai-based financial services firm India Infoline Finance Ltd and Supermarket Grocery Supplies Pvt. Ltd, which owns and operates online grocery marketplace BigBasket.

Its direct India portfolio crossed £280 million as of December 2019, according to its 2020 annual report.

Ankit Doshi

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