Freight forwarder Direct Logistics India Pvt Ltd is closing in on an acquisition, either in Singapore or China.
Will close a deal in China or Singapore in 3 months
MUMBAI: Freight forwarder Direct Logistics India Pvt Ltd is closing in on an acquisition, either in Singapore or China.
The acquisition would be its second after Shenzhen Dida Logistics Ltd, a Chinese firm it acquired last year.
The deal would give the company a foothold in supply chain logistics, which it has been planning as a forward business integration move in India as well.
Sunil Devrani, managing director of Direct Logistics said, “This is a logical extension to our business as in the next 3-5 years, we have a challenge to move into supply chain and do not have the skills with us yet. There are good targets in Singapore and China and acquiring them would also get us the skill sets, which we can use in the existing geographies and new ones.”
Devrani didn’t disclose the deal size, but said the companies under consideration had sales of $50-100 million.
Direct is looking at acquiring majority stake in the company, leaving 30% to the original promoters for two years. After two years, it would buy the remaining stake at a better valuation.
It is interested in buying out either a Singapore-based firm with a footprint in China or a Chinese firm where business can be scaled up easily.
Direct expects to close the deal in three months.
The company plans to raise $15 million through private equity placement in the next two months. The proceeds would be used for its expansion in India and China and also partly to fund the acquisition.
SIDBI, which had invested $1 million in Direct last year, has already given $2.5 million as advance to the company, which would be converted into equity depending on valuation received from other investors.
For the remaining amount, Direct plans to rope in an international fund. “We would rope in the investor with a commitment that if the size of acquisition increases, the existing fund would commit more money,” Devrani added.
Direct, which has offices in Shanghai and Shenzhen in China, is planning to set up eight more offices in the next one year.
“China would be the next interesting thing in our growth story. We will also hire 150-200 people there, with or without the acquisition,” Devrani said.
The company has set aside Rs 15 crore for expansion in India and China.
Direct would also roll out warehousing and distribution units in India after getting the skill sets from the acquired company. It has finalised locations in Pune, Bangalore, Chennai, Delhi and Mumbai and would also focus on cross-border SMEs.
Mithil Pai, group CFO, Direct Logistics said, “We will get back on warehousing in India in about a year’s time post-acquisition.”
Opto is setting up a centre of excellence in Singapore to replicate the best practices in supply chain business in India and other geographies.
Direct is looking at revenues of Rs115-120 crore this year and expects to double it in the next.
s_archana@dnaindia.net
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