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Edelweiss in talks to invest Rs450 crore in JM Baxi Group

LiveMint logoLiveMint 16-05-2017 Anuradha Choudhary

Edelweiss Group is in an advanced discussions to invest about Rs450 crore in Mumbai-based diversified logistics firm JM Baxi Group through a structured debt transaction, two people aware of the development said.

“The funding will be deployed to the company through Edelweiss Special Opportunities Fund (ESOF) II,” said one of the people, requesting anonymity as he is not authorized to speak to reporters.

The group is raising capital primarily for its asset-heavy businesses such as port terminals and container handling facilities such as inland container depots, or ICDs, which are housed under a separate unit, said the other person, also requesting anonymity.

The port terminals and ICD businesses come under International Cargo Terminals and Infrastructure Pvt. Ltd, a group company earlier known as United Liner Agencies of (India) Pvt. Ltd.

In response to an emailed query, JM Baxi’s chief executive officer R.K. Ganguly declined to comment.

An Edelweiss Financial Services spokesperson also declined to comment.

Edelweiss Global Asset and Wealth Management recently raised $350 million in the final close of its second credit-focused fund ‘ESOF II’, which invests in privately negotiated collateralized credit transactions.

ESOF II has raised funds from several institutional investors, including public pensions and insurance firms. ESOF I had raised $230 million. The fund achieved a first close of $205 million in June 2015.

Edelweiss’s second credit fund comes at a time when a host of other firms in the alternative investment space are in the market to raise credit-focused funds. These include Reliance AIF Asset Management Co. Ltd, Avendus Capital and private equity firms Kohlberg Kravis Roberts and Co. Lp and Baring Private Equity Asia.

With an asset base of more than Rs33,000 crore, Edelweiss Group is one of India’s leading diversified financial services companies.

In March last year, Mint reported that the JM Baxi Group had started talks with private equity funds to raise $150-200 million to invest the funds in its asset-heavy businesses.

The group, which started operations in 1916, has diversified into businesses such as a shipping agency, ship brokerage and chartering, bulk cargo operations, clearing and forwarding, container logistics, port development, tanker operations and ship management.

In 2012, IDFC Alternatives, the asset management arm of infrastructure-focused lender IDFC Ltd, invested Rs190 crore in the company through its India Infrastructure Fund.

The fund-raising and expansion plans of the JM Baxi Group come at a time when union roads minister Nitin Gadkari recently said at an event that the government was considering a proposal to provide infrastructure status to the logistics sector.

“The move will help logistics companies to easily avail themselves of loans from the banks to boost their infrastructure. The final call will be taken by finance minister Arun Jaitley on the issue,” Gadkari added.

Recently, Canada Pension Plan Investment Board (CPPIB) and Everstone Group’s industrial and logistics real estate development platform, IndoSpace, formed a joint venture named IndoSpace Core to acquire and develop modern logistics facilities in India.

In 2016, PE/VC investments worth $478 million were made across 20 deals in the logistics sector while in 2017 so far around $323 million has been invested across 17 deals, according to data provided by Venture Intelligence.

In October, Caisse de Dépôt et Placement du Québec (CDPQ), Canada’s second largest pension fund, agreed to invest Rs1,000 crore for a minority stake in TVS Logistics Services Ltd.

In August 2016, global private equity firm Warburg Pincus, which has more than $40 billion in private equity assets under management, invested about $125 million in third-party logistics company Stellar Value Chain Solutions Pvt. Ltd.

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