Saurashtra Freight Pvt. Ltd has charted out an inorganic growth strategy, two people privy to the development told VCCircle, as the company controlled by Canadian billionaire Prem Watsa’s Fairfax looks to diversify its business.
Fairfax India Holdings Corporation, the India-dedicated investment arm of Watsa’s Fairfax Financial Holdings Ltd, had picked up a 51% stake in Saurashtra Freight in January last year for Rs 200 crore ($30 million then) as it joined a growing list of foreign investors in India’s logistics sector.
Saurashtra Freight, which is 49% owned by Mumbai-based Saurashtra Group, used the money raised from Fairfax to acquire the container freight station business of a group company. It now operates the largest container freight station at Gujarat’s Mundra port.
The company has earmarked Rs 100 crore ($14 million) for acquisitions intransportation, logistics and related infrastructure segments, one of the persons cited above said, asking not to be named.
The company has appointed two bankers and is in discussions with three companies for potential acquisitions. “It is doing due diligence on those companies. Two of these companies are situated in Gurugram and Mumbai,” the person said.
A company spokesman confirmed the plan. He said that the company is looking for potential targets, preferably with a tech play, in its current areas of operation.
Saurashtra Freight will look to buy a majority stake in the targets by making primary investments, and not secondary share purchases, to fuel the targets’ growth plans.
The spokesman said Saurashtra Freight could deploy as much as Rs 350 crore, including the Rs 100 crore mentioned above, over the next two years for inorganic growth opportunities.
Saurashtra Freight provides services such as moving of containers to and from the port, cargo storage and transportation of cargo to the end customers as well as storage, maintenance and repair of empty containers. The company also owns shipping line Fairfreight Lines Pvt. Ltd and a transportation business with more than 200 trailers.
Fairfax’s India play
Watsa, the Indian-origin Canadian billionaire, had launched Fairfax India in November 2014. In January 2015, Fairfax India floated a public offering in Canada to raise $1.06 billion. It later topped up its corpus with $500 million more.
Last year, Fairfax India raised as much as $1.5 billion more to invest in India. Overall, the investment firm has a corpus of nearly $3 billion. The firm had invested fairly aggressively in India across sectors such as financial services, chemicals, aviation and logistics.
The logistics sector has attracted a number of private equity investors in recent years. In October, for instance, business-to-business tech-enabled logistics startup BlackBuck raised Rs 202.96 crore ($27.4 million) from a bunch of
Also in October, Pune-based logistics startup ElasticRun raised Rs 60 crore ($8 million) from existing investors Norwest Venture Partners and Kalaari Capital.A number of other tech-focussed logistics companies have come up over the past few years and raised funding from marquee investors. These includ Tiger Global-backed Delhivery, Warburg Pincus-backed Rivigo and Ecom Express, and Alibaba-backed Xpressbees.