India: TVS Infra in talks to buy 86% stake in Eredene-backed MJ Logistics

Eredene Capital Plc is in talks with TVS Infrastructure Ltd to sell its entire stake in MJ Logistics Services Pvt. Ltd for approximately Rs80 crore, two people with direct knowledge of the matter said.

“The AIM (Alternative Investment Market)-listed investor is in advanced stage of discussions to offload its around eight-year-old investment in MJ Logistics and the deal is expected to be sealed soon,” one of the two people cited above said on condition of anonymity.

AIM is a sub-market of the London Stock Exchange.

Eredene is exiting its holding at a loss, the second person said, also declining to be named.

London-based Eredene had invested around £11 million (Rs93.34 crore) in MJ Logistics, a provider of logistics, warehousing and distribution services in north India, for a 90% stake in 2008.

The fair value of the fund’s investment has since declined to £9.2 million (Rs78 crore), a value erosion of about 16%, Eredene had disclosed in its annual report in March. As on March 2016, it held a 86% stake in MJ Logistics.

A spokesperson for TVS Infra declined to comment citing company policy. Separate emailed queries sent to Eredene Capital and MJ Logistics went unanswered.

The Eredene fund is managed by Ocean Dial Asset Management Ltd and investments are made in India through a Mauritius subsidiary.

In September 2012, Eredene Capital decided not to make further investments in the country and set up an internal team headed by Ranveer Sharma to manage the existing portfolio.

Eredene made a total of 11 investments in various infrastructure projects in India—nine in port services, container logistics and distribution warehousing, one in IT offices and one in a large-scale affordable housing development.

Apart from MJ Logistics, Eredene owns stakes in Contrans Logistics Pvt. Ltd (Pipavav CFS) and Contrans Logistics Pvt. Ltd (Baroda ICD). It has exited all other investments. Last year, it exited its investment in Apeejay Infralogistics after suffering significant value erosion. It sold its entire 50% stake back to partner Apeejay Shipping after it failed to find a buyer.

MJ Logistics is into the multi-user third-party logistics business and operates 800,000 sq. ft warehousing capacity in north India.

It has a 200,000 sq. ft fully automated hub warehouse at Palwal in Haryana, which provides both ambient and cold storage warehousing. Tata Motors Ltd, PepsiCo, Subway, DuPont Danisco and Unilever are some of its customers.

MJ Logistics’ revenue rose 16% to Rs44.11 crore in the year ended 31 March 2015. It also reported a profit for the first time in the year.

A total of 13 private equity and venture capital investments worth about $316 million were sold in 2016, according to data provided by research and analytics firm Venture Intelligence. Besides, a total of $525 million was invested by private equity and venture capital firms across 17 deals, the data showed.

This article was first published on Livemint.com