PremiumTVS Group plans to take its logistics business public, with a ₹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 seeks to tap the stock market boom
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TVS Group plans to take its logistics business public, with a ₹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 seeks to tap the stock market boom.
TVS Supply Chain Solutions (TVS SCS) offers transportation, logistics, material handling, in-plant warehouse management, and aftermarket warehousing facilities in India. It also offers 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 automobiles, beverages, manufacturing, electronics and defence.
“The company has for a long time driven its growth through private equity money and now feels it is at a scale where it is comfortable to take the company public, providing an exit route to investors and also raising growth capital for the next few years," one of the two people said, 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 person said. “The company is also in discussions to add more banks to the IPO syndicate," he said.
While the IPO size is planned at ₹2,500-3,000 crore, this could change as discussions continue on the quantum of shares existing investors will sell and if promoters will also pare holdings, the second person said.
“The fresh capital raised will go towards reducing debt, funding working capital needs," the second person said, requesting anonymity.
In the last three months, TVS SCS raised nearly ₹1,600 crore from private investors. This included the ₹590 crore raised in October from a fund managed by Exor, the Europe-based diversified holding company controlled by the Agnelli family. In September, it raised ₹1,000 crore from Kotak Special Situations Fund. Of this, ₹800 crore was raised by a promoter entity of R. Dinesh, managing director of TVS SCS, to buy out Canadian pension fund CDPQ’s stake in the company and help the TVS family consolidate its holding.
Dinesh, JM Financial, JP Morgan and Axis Capital did not respond to emailed queries.
TVS SCS is the second fastest growing company in the TVS group after TVS Automobile Ltd and the third-largest by revenue after TVS Motor Co. Ltd and Sundaram-Clayton Ltd, according to India Ratings. The logistics firm contributes 10% to the group’s revenue, according to the credit rating agency.
Despite the disruptions caused by covid, TVS SCS recorded a 5% growth in revenues to ₹6,950 crore in the year to March, India Ratings said in a June report.“The dip in revenue from India and the US, mainly due to the covid-19-led decline in the trade flows and supply-side disruptions, was mitigated by a strong performance in the Europe and the Asianic business," it said.
TVS SCS’s adjusted Ebitda (earnings before interest, tax, depreciation and amortization) margin widened to 6.8% in the year to March from 5.6% in the previous year. Gross debt reduced to ₹2,800 crore from ₹3,400 crore during the period, according to India Ratings.
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