The catapult in logistics industry caused by booming e-commerce with GST push has attracted the largest investment this year. Private Equity (PE) and Venture Capital (VC) investment were estimated a thrice the value of 2018 in 2019 year-to-date in the logistics sector.
World’s largest PE firm Blackstone recently called logistics their ‘highest conviction’ sector, a data from research firm Venture Intelligence shows around $620 million worth investment in logistics across 12 deals this year, compared to $265 million in 2018.
Fundraising by modern logistics players Delhivery ($413 million) — which also achieved unicorn status this year, Blackbuck ($132 million), Rivigo ($36 million), Locus ($26 million) and others, are a few top deals that has helped 2019 reach record highs in the past five years.
The mergers and acquisitions in the sector too have clocked $603 million across 10 deals, with a bulk of them being strategic deals in warehousing.
On the exponential boom in the investment, Sandeep Chadha, CEO & Founder, Warehouster Capital Advisors India said: “Post the implementation of GST, companies are transforming and consolidating their existing smaller warehouses primarily which were Grade B into Grade A where they can better utilize the floor space and maximize efficiency by exploiting volume space.”
“Such a huge spike in displacement from Grade B to Grade A is attracting investment in the warehousing industry. The investment is majorly coming from the institutions, platform level companies, pension funds, endowment funds, PE and large developers in the industry.”– Sandeep Chadha, CEO & Founder, Warehouster Capital Advisors India
“Also, we recently had a huge success in terms of commercial Real Estate Investment Trust (REIT) as Blackstone – Embassy has launched its first REIT initial public offering in March. I think the demand for REITs and alternative investment funds will escalate more in future and it will provide various institutional investors who are investing in warehousing with an easy exit route as well,” concluded Mr Chadha
Global port operator DP World’s acquisition of KRIBCHO Infrastructure for $145 million and LOGOS’ entry into the Indian warehousing market with the Casagrand Distripark buy are a few top deals.
Starting off as a B2C wave, B2B logistics start-ups engaged in last-mile delivery, warehousing, freight, supply chain optimisation etc. are also now enjoying investor patronage.