New Delhi: Emerging markets (EM)- focused logistics firm 20Cube Logistics Ltd, backed by private equity (PE) fund Zephyr Peacock, is looking to raise $20 million more in a fresh round of funding.
In February 2013, 20Cube raised $20 million from Zephyr Peacock and Singapore-based private equity fund Credence Partners, giving the investors a 49% stake. The rest is owned by the promoters.
Mukul Gulati, the managing director at Zephyr Peacock, confirmed that 20Cube was seeking to raise $20 million from PE investors. “We have just launched the fundraising process... We have appointed Edelweiss as the banker,” said Gulati.
The Chennai-based 20Cube specializes in international transportation and contract logistics services. It offers digitized freight forwarding services, easing the entire process of moving shipments across countries through local customs.
The fresh round of funding will be used to expand its presence by setting up new branches and through acquisitions, support working capital needs and strengthen digital systems and capabilities, Seetharaman Anand, founder and director of 20Cube Logistics, said.
The company lets customers book their cargo shipments online directly, eliminating paperwork and all logistics complications in booking carriers, managing customs, tariffs and other logistics.
Customers can also access documents connected with each shipment stored on the cloud, eliminating the need for potentially cumbersome document storage and search.
20Cube’s operating model and proprietary information technology system helps the firm reduce costs by around 30% compared to traditional logistic companies.
Anand said 20Cube plans to expand its business to over $500 million over the next 4-5 years through both organic growth and acquisitions.
The global freight forwarding industry grew at an average rate of about 12% since the 1990s to a size of about $250 billion in 2015.
20Cube has established operations across 27 cities in 14 countries over the past four years, Anand said, adding that its Ebitda (earnings before interest, tax, depreciation and amortisation)—an indicator of operating profitability—had grown at a compound annual growth rate (CAGR) of 200% over the past two years.
Logistics has been an attractive sector for PE investments because the business is considered a proxy for overall economic growth. In the past five years, the logistics space has seen private investments worth about $1.17 billion across 74 deals, according to data from deals tracker VCCEdge.
In 2015 alone, $418 million was invested in the logistics sector, driven primarily by the e-commerce boom.
Innovative B2B Logistics Pvt. Ltd (Inlogistics), backed by India Value Fund Advisors, is looking to raise Rs200 crore from PE firms, Mint reported in August.
The last couple of years of years have also seen several logistics firms raise money through initial public offerings (IPOs).
In 2015, New Silk Route-backed VRL Logistics went public. The firm’s Rs460 crore IPO was subscribed 74 times.
Also that year, container freight station operator Navkar Corp. Ltd raised Rs600 crore through an IPO.
In 2014, cold chain logistics firm Snowman Logistics Ltd saw its Rs197 crore IPO subscribed almost 60 times.