TVS Group plans to take its logistics business public 2,500-3,000 crore share sale in the first half of next year, three people aware of the development said, as the Chennai-based conglomerate looks to tap the buoyancy in the stock market.
TVS Supply Chain Solutions (TVS SCS) provides Transportation, Logistics, Material Handling, In-Plant Warehouse Management and Aftermarket Warehousing facilities in India. It also provides logistics and supply chain related services in the UK, US, Spain, Germany and Thailand. TVS SCS operates on an asset-light business model, working with clients across Automobile, Beverage, Manufacturing, Electronics and Defence.
“The company has long driven its growth through private equity funding and now feels that it is on a scale where taking the company public, providing investors with an exit and It also has to raise development capital,” said one of the two people, seeking anonymity.
TVS SCS has appointed JM Financial, Axis Capital and JP Morgan to prepare the draft prospectus for the initial public offering (IPO), which is expected to be filed early next year. “The company is also in talks to add more banks to the IPO syndicate,” he added.
While the IPO size plan is 2,500-3,000 crore, this may change as discussions are on on the quantum of shares to be sold by existing investors and if the promoters will also give up the holdings, said another person.
“Fresh capital has been raised, which will go towards reducing debt, meeting working capital requirements,” said the second person, requesting anonymity.
In the last three months, TVS SCS raised approx. 1,600 crore from private investors. were involved in In October, Rs 590 crore was raised from a fund managed by Agnelli family-controlled Europe’s diversified holding company Axor. In September, it increased 1,000 crore from Kotak Special Situation Fund. Its, Rs 800 crore was raised by the promoter arm of TVS SCS Managing Director R Dinesh to buy Canadian pension fund CDPQ’s stake in the company and help the TVS family consolidate its stake.
Dinesh, JM Financial, JP Morgan and Axis Capital did not respond to emailed queries.
According to India Ratings, TVS SCS is the second fastest growing company in the TVS Group after TVS Automobile Limited and the third largest revenue company after TVS Motor Company Limited and Sundaram-Clayton Limited. According to the credit rating agency, the logistics firm contributes 10% to the group’s revenue.
TVS SCS registers 5% growth in revenue despite disruptions caused by Covid 6,950 crore in the year in March, India Ratings said in a June report. “The decline in revenue from India and the US was moderated primarily due to the Covid-19-led decline in trade flows and supply-side disruptions. Strong performance in Europe and Asian business.”
TVS SCS’ adjusted Ebitda (earnings before interest, tax, depreciation and amortization) margin increased to 6.8% in March from 5.6% in the previous year. minus gross debt 2,800 crore from 3,400 crore during this period, according to India Ratings.
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