Samara Capital-backed Spoton Logistics has bought a strategic stake in Chennai-based RTS Logistics, a platform extension into third-party logistics, as end-to-end solutions become the sought-after edge in the supply chain businesses.
“We were looking for partnerships with large companies with whom we can create a platform and collaborate on processes and technology, and we found the adjacencies as the right fit to engage with Spoton,” said Narasimhan R, Principal Founder of RTS, without disclosing the size of the deal.
RTS operates in a space occupied by the R Dinesh-led TVS Logistics and Mahindra Logistics, providing third-party logistics. RTS manages the supply chain for several blue-chip firms, said Narasimhan.
It follows an asset light model wherein it operates a fleet of vehicles and runs warehouses on lease, freeing up capital on investments into technology. Spoton Logistics is an express delivery company operating across 300 locations and delivery from its 38 service centres.
In August 2018, homegrown private equity player Samara Capital, leading a team of investors, acquired Spoton Logistics for over Rs 550 crore. The acquisition of RTS Logistics “falls in line with Spoton’s intent to create adjacencies in its logistics platform,” said an investment banker aware of the deal.
India-focussed Samara has been investing in emerging companies in the consumer products services, retail, infrastructure and other sectors. An email to Samara Capital remained unanswered as of press time. Veda Corporate Advisors assisted both parties on the transaction.
RTS’ 3PL business, in which Spoton has bought a majority stake, will be run as a separate entity with a separate balance sheet and management team, Spoton’s managing director Abhik Mitra told.
While its focus is on the automotive segment, Spoton eventually wants to add apparel and electronics to the segment. Spoton Logistics has been clocking revenue growth of 25% over the last three years.
Due to the overall slowdown in the logistics market, the growth will likely taper off to 18% this financial year, said Mitra. He estimated the company will end the year with a revenue of just over Rs 700 crore. Ebitda for FY20 will grow 25% on year to Rs 55 crore, he added. According to investment trackers, the Indian Logistics space has been receiving increased investments.
Through 12 deals in 2019, Indian logistics firms mopped up over $892 million, a jump of 17% over total investments last year. Industry estimates place third-party logistics at a market size of Rs 58,000 crore, growing at a 19-20% compounded annual growth rate. Analysts say the logistics sector, sensitive to macro-economic currents, will continue to see deals.
“Towards the end of 2019, we saw several investments take place in e-commerce related logistics providers like Delhivery and E-Com Express. This can be expected to continue,” said Arun Natarajan, founder of valuations research company Venture Intelligence.