The transaction, valued at ₹641 crore, will be used to fund FSC’s growth plans
Japan’s Nippon Express has acquired a 22 per cent stake in Kishore Biyani’s Future Supply Chain Solutions Ltd (FSC) for ₹641 crore as the logistics company looks to tap into the rapidly-growing Indian logistics market.
As part of the deal, Nippon Express has bought the 14.6 per cent stake of the existing share capital held by SSG Capital Management in FSC.
Future Supply Chain Solutions will issue 37,89,350 new shares to Nippon Express at a price of ₹664 per share (22 per cent premium to Thursday’s market price). Through this primary issue, Nippon Express will hold 8.6 per cent stake on a fully diluted basis and FSC will raise around ₹252 crore for funding its near-term growth plans.
Both these transactions will result in Nippon Express owning a 22 per cent stake in FSC (on a post money, fully diluted basis), entitling it to hold a board seat in FSC.
Nippon Express will have a right of first refusal (RoFR) on future stake dilution by FSC.
Nippon Express and FSC plan to explore synergies between the two organisations. FSC and Nippon Express will jointly evaluate leveraging Nippon Express’ competency in diverse sectors for India. FSC plans to leverage Nippon Express’ Japanese and MNC clients for exploring new business opportunities in India, especially for 3PL and express logistics operations.
- FSC would sell about 10 million shares in the company at ₹664 per share, a 22% premium to its Thursday’s closing price
- Nippon will have one board representation, besides right of first refusal on future stake dilution
- FSC will be able to access Nippon Express’ Japanese and MNC clients for exploring new business opportunities in India
“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, Future Supply Chain Solutions.
“We are going to sit together and discuss specifics in terms of collaborations. This would mean new customers, new segments and new sectors. As of today, our focus is entirely on fashion and consumption sectors. As we move along, we could enter into other sectors where similar services may be needed,” he said.
“We don’t do much of freight forwarding right now. That’s a very small part of our business but Nippon is very strong on international freight forwarding. So, we could try and get into some of these sectors where FSC has not focused aggressively using the complementary skills of Nippon and FSC,” he added.
Nippon Express first entered the Indian market in 2007 and currently focusses on international freight forwarding of cargo arriving in and departing from India. “As a next step to further expand our India business, we are enhancing domestic logistics business in India to capture expanding domestic demands,” Nippon Express said in a statement.