Nippon Express acquires 22% stake in FSC for Rs 641 crore

December 12, 2019: Future Supply Chain Solutions (FSC) signed a business collaboration agreement (BCA) with Nippon Express South Asia & Oceania, a subsidiary of Nippon Express. Kishore Biyani-promoted Future Group will sell 22 percent stake to the Japanese logistic firm for Rs 641 crore, FSC stated in a press conference held in Mumbai.

The partnership will jointly explore growth opportunities for new and existing customers based on their strategic partnership and business collaboration to expand revenues for both the companies. The joint business collaboration will start from January 2020. FSC will demonstrate its 3PL and express logistics operations, attracting potential new business opportunities from Nippon Express’ existing Japanese and MNC clients. Both the companies have agreed to formalise a steering committee and Nippon Express will depute its representatives to operate alongside FSC’s management.

Rakesh Biyani, non-executive chairman, Future Group, said, “FSC along with Nippon Express is poised to provide tremendous value not only in India but across the world and the opportunity that will emerge over the next decade. India plays a pivotal role in expanding opportunity in the Indian Ocean and around Africa and we will work together to build on this opportunity.”

Commenting on the transaction, Mayur Toshniwal, MD, FSC said, “I am pleased to share that Nippon Express has joined the FSC family as a strategic partner. Together we will provide a best in class supply chain service offering to our customers in India, given our complementary skill sets and domain expertise. We are excited about the business expansion potential and revenue synergies from this partnership and remain committed to delivering significant value to our stakeholders in the long term.”

Nippon Express and FSC have received all necessary approvals from the Competition Commission of India (CCI), FSC shareholders, BSE and the National Stock Exchange of India announced on September 20. According to the transaction, the Future Group's logistics arm will issue 3.78 million shares to Nippon Express at a price of Rs 664 per share.

This is the second time in two weeks that the CCI has given its nod to foreign investment in a Future group company. On November 28, the CCI had approved Amazon’s proposed Rs 1,500-crore deal to acquire a 49 percent stake in Future Coupons, a Future Retail promoter entity. The transaction will give Amazon a 3.5 percent stake in Future Retail.

In another development, Mitsui & Co is in talks with Future Group to invest in a company that will supply fresh food to upcoming 7-Eleven stores, the group’s food and grocery retailing verticals, as well as retailers and restaurants, owned by other companies. Kishore declined to comment on the negotiations when asked by ITLN. The group is expected to roll out 7-Eleven-branded convenience stores in Mumbai early next year and the Future-Mitsui company plans to provide sandwiches, pizzas, bakery items, salads, cut-fruits and a raft of beverages including ice teas, coffee and juices to them.

Nippon Express and FSC aim to pursue three business strategies through this collaboration.

• Offer FSC’s integrated and high-quality service offering to Japanese and other foreign customers of Nippon Express who are currently doing business in India or are planning to penetrate into the Indian market in the near future.
• Offer Nippon Express’ global logistics services to Indian customers via FSC.
• Increase FSC’s operational efficiencies through the introduction of latest / global technologies and process improvements / Kaizen activity.

Commenting on the strategic partnership, Satoshi Horikiri, senior managing executive officer, and chief managing officer of international business headquarters at Nippon Express said, “This partnership will form an important part of our long-term vision of becoming a logistics company with a strong presence in the global market through dynamic growth. To be specific, we hope to increase our sales outside Japan from our current sales of US$ 4 billion to US$ 12 billion by 2028 and become a proud world-class logistics company.”

Incorporated in March 2006, FSC is a third-party logistics service operator in India and covers the entire gamut of the supply chain across the logistics value chain including smart warehousing, transportation, and distribution system and temperature-controlled logistics. It largely serves consumption-driven sectors like fashion, footwear, food, FMCG, electronics, and furniture.

Nippon Express established in 1937 is a global logistics company that provides land-sea-air service across 711 bases in 308 cities in 48 countries. It is expanding the storage and transport of goods worldwide. Nippon Express also aims to reduce the environmental impact of transportation and CO2 emissions through the use of technologies, intermodal transportation, and joint delivery.