Warburg Pincus places a bet on container depot business

The Indian affiliate of global private equity firm — Warburg Pincus — is investing $100 million in Continental Warehousing Corporation (Nhava Seva) Ltd (CWCNSL), the flagship company of NDR Group. The investment will enable the logistics firm to set up inland container depots and container terminals across India.

The, investment which is Warburg’s fourth in the Indian markets in the last 12 months, will also be used for buying out a few existing Continental investors as also for subscription to new shares.

Officials from both Warburg Pincus India and Continental Warehousing refrained from sharing details on secondary transactions related to this placement. Industry sources, however, said, “One of its existing investors, IL&FS Investment Managers will exit completely while a few others are divesting partially.”

IL&FS Investment Managers, a listed private equity firm, had invested about three years ago around $7 million in Continental Warehousing. It will now divest its entire stake to Warburg. Other investors such as Aureos India Fund and ePlanet Venture, which came on board and collectively invested $16 million in 2009, are understood to be in negotiations to exit.

Warburg has been investing in the logistics space globally. It has made two investments in India so far — Gangavaram Port Ltd, a port infrastructure company, and IMC Ltd, a logistics provider of bulk liquid storage. Continental Warehousing is its first investment in a third-party logistics infrastructure company.

Vishal Mahadevia, managing director, Warburg Pincus India, said, “If you look at some industry estimates, only 10% of logistics functions in India are estimated to be outsourced to organised players. The figure is anywhere between 40% and 80% in more developed economies. However, the advent of GST and other improvements is a great opportunity for leading players like NDR to benefit and help reduce their customers’ costs and also re-engineer the overall supply chain.”

The NDR Group has an integrated national network of logistics and related infrastructure facilities across 50 centres in the country.