HONG Kong-based Li & Fung Group, a global supply chain manager, has picked up more than 26% stake in Future Group’s logistics arm Future Logistics Solutions for about $30 million.
Future Group CEO Kishore Biyani and Future Logistics Solutions chief executive Anshuman Singh signed an investment contract with Fung Capital, the private equity investment arm of the families of Dr Victor Fung and Dr William Fung that control Li & Fung, in Hong Kong.
"We want to further our relationship with Li & Fung towards building a massive entity in the logistics space,” Mr Biyani said over the phone, while confirming the development. Li & Fung manages the entire sourcing and distribution from Asia for many multinationals including Wal-Mart, Tesco, Nike and Tommy Hilfiger. It even holds a minority stake in Tommy Hilfiger.
Future Group is also proposing to rename Future Logistics Solutions as Future Supply Chain Solutions as a recent Madras High Court order restrained it from using the trade name ‘Future Logistics’ on a petition filed by Chennaibased Future Logistics Private Ltd.
The funds raised through the deal will be used to part-finance the company’s expansion plans that include a setting up warehouses around the country and building a nationwide transportation network, officials close to the development said. The company is also looking to tap the debt market to raise funds for its expansion, they added.
"We want to capture a dominant share in this segment as a third party logistics (3PL) service provider,” Mr Biyani said. The logistics firm currently services over 1,100 retail outlets across India through a warehousing network spread over 3 million sq ft in 30 centers, 2.6 million stock keeping units and a fleet of more than 500 vehicles.
The company is estimated to close the current financial year with a turnover of Rs 300 crore.
Li & Fung, which has a sourcing network covering more than 40 countries, is the largest supplier of clothes and toys to Wal-Mart Stores and Target with garments making up a large part of its business. It also deals in fashion accessories, furnishings, gifts, handicrafts, home products, promotional merchandise, toys, sporting goods and travel goods.
The Indian logistics market is estimated at about $100 billion with organised players accounting for just 6% of the total market. Expected to grow 25-30% over the next couple of years, the industry has begun attracting private equity investments of late.
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