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Private Equity

Asia Climate Partners invests in cold chain logistics firm ColdEX

Firm aims to expand cold chain warehousing capacity over the next three years, with a capital outlay of Rs250 crore

ColdEX’s customers include the likes of Mondelez India Foods Ltd, Burger King Corp., Yum! Brands, Starbucks Corp., and Amul.

ColdEX Logistics Pvt. Ltd, which runs a fleet of 850 refrigerated trucks known as reefers, has agreed to sell a stake in itself to private equity fund Asia Climate Partners for an undisclosed sum.

As part of the deal, Asia Climate Partners, backed by the Asian Development Bank and ORIX Corp. of Japan, will also buy a stake held by another private equity firm, India Equity Partners, which acquired the stake in ColdEX in December 2010.

With Asia Climate Partners coming on board, this would be the second round of institutional investment in the company.

The cold chain company did not disclose details of the stake sale.

Cold chain refers to the transportation and storage of products such as meat, dairy, fruits, vegetables, drugs and medicines under temperature-controlled conditions in order to increase their shelf life.

India is the third largest food producer in the world, yet barely 2.2% of the fruits and vegetables grown in the country are processed, according to the ministry of food processing industries.

The ministry is focusing on creating a cold chain infrastructure to link the farmer to the consumer and creating a cold chain grid in the entire country.

ColdEX transports products at temperatures ranging from 25 degrees Celsius to -18 degrees Celsius for its customers, which include quick service restaurant chains, confectionary chains, food processing firms and pharmaceutical companies.

“This investment will enable ColdEX to ramp up capacity and achieve our vision of becoming a total cold chain solution provider to our customers by building world-class infrastructure and an affordable and reliable supply chain,” said Gaurav Jain, founder and managing director of ColdEX.

He said ColdEX has plans to add new cold chain warehousing capacity of 50,000 pallets in the next three years with a capital outlay of Rs.250 crore. The funds raised from Asia Climate Partners will help establish a pan-India footprint for its warehouses in addition to its transportation network, he said.

ColdEX’s customers include the likes of Mondelez India Foods Ltd, Burger King Corp., Yum! Brands, Starbucks Corp., and Amul (run by Gujarat Cooperative Milk Marketing Federation Ltd), among others.

Anand Prakash, managing director of Asia Climate Partners, said ColdEX is the largest and fastest growing private company in the cold chain logistics space. “We see tremendous potential in both the company and the cold chain logistics sector in helping improve resource efficiency and reduce food wastage in India. Asia Climate Partners will bring its institutional support to help the company build a pan-India presence and provide a total solution to its customers,” Prakash said.

In November 2014, Mint had reported that ColdEX was in talks with a clutch of private equity firms and strategic investors to raise around Rs.300-500 crore, citing Jain.

In 2014, Gati Ltd, a logistics company, sold a minority stake in its cold chain unit—Gati Kausar India Ltd—to Mandala Capital AG Fund Ltd and Mandala Agribusiness Investments II Ltd to raise Rs.150 crore. In the same year, Snowman Logistics Ltd, a company promoted by Gateway Distriparks Ltd, raised Rs.197 crore from the sale of 42 million equity shares in an initial public offering (IPO) that was subscribed 60 times.

The Indian cold chain industry is expected to grow at a compound annual growth rate of 25.8% till 2017, according to a 2013 report by industry body Associated Chambers of Commerce and Industry of India. The industry is expected to reach Rs.64,000 crore in value by 2017, the report added.

This article was published in the Live Mint, to read please click here.