Global private equity (PE) firm Investcorp, which has backed Indian companies such as InCred and Wakefit, plans to invest $1 billion in the country over the next five years, drawn by significant growth opportunities in sectors including logistics and manufacturing.
Investcorp on Tuesday said it has invested ₹500 crore in 20Cube 3PL Solutions, its latest bet on India's logistics sector, and aims to build the company as a platform for organic expansion and acquisitions within the sector.
“We are putting in a substantial amount primarily into the company to be able to drive growth on day one, and we’re already starting to look at M&A opportunities to create this as a platform play within the logistics sector,” Gaurav Sharma, head of India investment business at Investcorp, told Mint in an interview on Tuesday.
The latest investment comes at a time when the private equity firm is planning to begin raising a larger fund as cheque sizes in the mid-market increase, Sharma said without specifying the planned corpus of the next fund.
The 20Cube investment involves separating its India contract logistics business from Singapore-based 20Cube Logistics, which will continue to focus on international freight forwarding.
The India business operates more than 7 million sq. ft. of warehousing space and serves enterprises across consumer durables, chemicals, automotive components and engineering goods. "The company has seen growth of about 25-30% and continues to be a high margin business attracting us into this opportunity," said Sharma.
It plans to expand its warehousing footprint to more than 20 million sq. ft. over the next four to five years. Investcorp and 20Cube also plan to invest another ₹500–750 crore in acquiring contract logistics businesses that can be added to the platform.
Investcorp has already invested about $1 billion in various companies in India, and its fresh investment push points to continued confidence in the country's long-term growth prospects.
Investcorp sees a long runway for consolidation in Indian logistics space as companies shift from fragmented operators to organised third-party logistics providers.
“We believe that India is at just the beginning of a long journey of that formalization and a more organized 3PL (third-party logistics) because that is the demand of the time. And that’s why we made this investment,” he said.
The firm expects logistics to benefit from increasingly complex supply chains, deeper penetration into tier-II and tier-III cities and rising demand for technology-enabled services.
Manufacturing and industrials have also emerged as an area of interest for Investcorp, driven by the push towards domestic manufacturing and the China+1 strategy.
“Manufacturing and industrials is a sector, which has come up over the last few years. Canpac, a 2023 investment, is an example, but we’re looking closely at it.”
The firm sees opportunities across manufacturing as India seeks to increase the share of manufacturing in its economy and create jobs.
“Manufacturing is being recognized now as almost imperative for India to be able to drive jobs and growth and GDP growth as the manufacturing percentage of GDP is still very low,” he added.