April - 2014 - issue > VC talk

Logistic and Warehousing: Great Avenues for Investment!

Ranveer Sharma

Managing Director -Eredene Capital

Saturday, April 5, 2014

Forward

Eredene Capital Plc (ERE:L)is an independent investment company that specializes in investing in Indian infrastructure with a focus on port services and logistics. The Eredene Group has a portfolio of eight principal investments in India.

Avenues for Investment

From last few years, sectors like port, logistics and warehousing are witnessing ongoing changes. The traditional logistics and warehousing businesses are developing a more institutional approach to attract private capital. Within five years, these sectors will evolve significantly with key trends mentioned below:

> The entrepreneurs (Promoters) who were focused on the top line businesses to grow as fast as possible will now shift focus towards a well defined execution and expansion strategy. This will see the logistics sector get more organized than the current level of around six percent.
> Earlier, promoters were focused on business ownership but now, they are seeking private capital. Additionally, we will see more promoters' acceptability for debt funding to achieve an optimal capital structure for the business.
> Private equity investors will adopt a more sectoral focus to logistics and warehousing investments like - agricultural warehousing, cold storage warehousing and e-Commerce logistics.
> Investors in India will be more patient as western investment models cannot be superimposed on Indian businesses. They will typically seek an investment horizon of 6 - 8 years against typical 5 years horizon in the west.