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Nippon Express buys 22% in Biyani’s logistics company for Rs 646 crore

FSC would sell about 10 million shares in the company at Rs 664 per share

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Future Supply Chain, Nippon Express, Kishore Biyani, SSG Capital, Logistics, Supply chain

Kishore Biyani’s Future Supply Chain Solutions (FSC), which provides supply chain and logistics services to businesses, said it will sell 22% stake in the firm to Nippon Express Co, one of Japan’s largest logistics company.

FSC said the proposed acquisition, a combination of primary issuance and secondary purchase, will be made by Nippon Express (South Asia & Oceania) Pte. Ltd— a subsidiary of Nippon Express.

As part of the deal, FSC would sell about 10 million shares in the company at Rs 664 per share.

The primary issuance, approved by FSC’s board in Friday’s meeting, would include a preferential allotment of about Rs 252 crore, which would result in Nippon Express holding an 8.6% stake in the firm on a fully diluted basis.

The capital will be used to fund FSC’s near‐term growth plans.

Further, Nippon Express would enter into a share purchase agreement with SSG Capital, an existing shareholder of the company, which will exit the firm completely after selling its residual six million shares, representing 14.6% of the FSC’s existing share capital. The Hong Kong-based alternative investment manager had bought a 40% stake in the firm in April 2016 for Rs 580 crore

Both these transactions will result in Nippon Express owning a 22% stake in FSC, along with a right to nominate a director to the board of the company.

“Through this partnership, Nippon Express and FSC are well poised to derive significant synergies given their complementary skill sets and services offering, and gain a deeper foothold in the large and growing Indian logistics sector," said Mayur Toshniwal, managing director of FSC.

The investment would allow Nippon Express and FSC to expand and explore logistics requirement across sectors in the Indian market. The deal would also help FSC access Nippon Express' Japanese and MNC clients for exploring new business opportunities in India, especially for third-party and express logistics operations, the company said.

Incorporated in 2006, FSC is a third‐party logistics firm with a pan-India distribution network. It provides supply chain and logistics services including, smart warehousing, transportation, temperature controlled logistics and last mile delivery logistics. The firm has 94 distribution centers across the country, covering about 8.31 million sq-ft of warehouse space. Its “hub‐and‐spoke" distribution model comprises 13 hubs and 132 branches across India.

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