Nippon Express takes 22% stake in Indian logistics specialist Future Supply Chain Solutions

Japanese logistics giant Nippon Express will acquire a 22% stake in India’s Future Supply Chain Solutions (FSC), with the two companies planning to explore business opportunities in India’s fast growing 3PL and express logistics sectors.

Nippon Express said in a statement that an important part of its “core strategy” is to focus on strengthening its India business to capitalise on the “rapid growth” expected in the Indian logistics market.

It added: “The Indian logistics market is expected to have significant growth driven by key factors like modernisation of the road infrastructure network, reorganisation of traditional supply chain networks due to the implementation of Goods and Service Tax (GST) and consumption growth driven by a fast growing middle income group.”

Mumbai-headquartered FSC operates a pan‐India distribution network, and offers integrated warehouse management systems with automated technology systems alongside a hub and spoke transport model comprising 13 hubs and 132 branches across India.

FSC operations are run through 94 distribution centres across India, covering approximately 8.3m sq ft of warehouse space.

On its website, FSC describes its three key services areas as contract logistics, as well as express point-to-point, less-than truck-load, time-definite transport, plus cold-chain warehousing, transport and long-haul distribution of perishables.

FSC managing director Mayur Toshniwal said: “We welcome Nippon Express, a highly respected logistics player globally, into the FSC family and are excited about the potential of this strategic partnership in creating a best in class supply chain service offering.

“Through this partnership, Nippon Express and FSC are well poised to derive significant synergies given their complementary skill sets and services offering, and gain a deeper foothold in the large and growing Indian logistics sector.”

Nippon Express first entered the Indian market in 2007 and currently focuses on international freight forwarding of cargo to and from India. As a next step to further expand our India business,
we are enhancing domestic logistics business in India to capture expanding domestic demands.

The share transaction is a combination of primary issuance and secondary purchase from an existing Investor.  FSC will issue nearly 37m shares to Nippon Express at a 22% premium on the current market price.

Through this primary issue Nippon Express will hold 8.6% stake on a fully diluted basis and FSC will raise additional for funding its near‐term growth plans. 

Nippon Express has also entered into a share purchase agreement with institutional FSC shareholders of to acquire around 59m shares representing 14.6% of existing share capital. Both these transactions will result in Nippon Express owning a 22% stake in FSC. Nippon Express will have representation on FSC’s board of directors as part of the deal.