Gati forms JV with Japanese Kintetsu World Express
Mahendra Agarwal, Founder and CEO of Gati Ltd said, "The partnership will help us leverage KWEs global customer base, develop world class infrastructure capabilities, enhance our distribution services and further strengthen our leadership position in Indi
Gati Ltd, a city-based express distribution and supply chain solutions provider, has formed a joint venture with Kintetsu World Express, a Japanese global logistic service major.
According to the JV agreement, Gati will transfer its Express Distribution and Supply Chain (EDSC) business to the new JV company -- Gati-Kintetsu Express -- in which Kintetsu will buy 30 per cent stake for nearly Rs 268 crore, Gati said in a statement on Monday.
"Under the JV agreement, Gati will hold 70 per cent stake and 30 per cent will be held by KWE. As part of the transaction, Express Distribution and Supply Chain (EDSC) business of Gati will move into the joint venture company through a Business Transfer Agreement.
"KWE will invest Rs 2,67.7 crore for its 30 per cent stake in the JV through a combination of primary and secondary acquisition of shares," the statement said.
Shares of Gati touched lower circuit at Rs 41.90 on the BSE in the afternoon.
The funds raised from the transaction will be primarily used to reduce debt. The JV Company shall be consolidated in financials of Gati, it added.
Mahendra Agarwal, Founder and CEO of Gati Ltd said, "The partnership will help us leverage KWEs global customer base, develop world class infrastructure capabilities, enhance our distribution services and further strengthen our leadership position in India."
Satoshi Ishizaki, CEO of KWE, said the partnership with Gati will enable KWE to further expand and strengthen its global operations, with the Indian market increasingly growing in size and importance.
The joint venture company will support large customer base of KWE who have operations in India, simultaneously strengthening KWEs distribution capabilities into the Indian Market.
Together KWE and Gati will partner in supporting business expansion of domestic and international customers in the Indian market.
The JV shall also invest in high-end 3PL facilities, including temperature controlled warehouses.
KPMG Corporate Finance was the exclusive financial advisor to Gati Limited, it further said.