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Mumbai-based Patel Integrated Logistics has raised funds from Mauritius-based specialist PE investment firm Frontline Strategy.

Patel Logistics, one of the oldest transportation and logistics firms in the country, plans to launch its ecommerce business. As of now, it is eyeing Tier 2 and Tier 3 cities in western and southern India. Last year, the company had tied up with Amazon for cargo alliance and goods and articles deliveries.

The secured funds will be used to establish new offices and warehouses across the country. “We plan to roll out 50 branches in the next six months, adding about 10 branches per month at present, and expect to touch 300 branches in three years. The funds will be mainly used for this”, said Areef Patel, Vice-Chairman of Patel Logistics.

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People in the know-how of the deal have said that as part of the first leg of the transaction, Frontline has invested around $2.8 Mn (INR 19 Cr) and will further invest $2.7 Mn (INR 18 Cr) at a later stage.

As part of the deal, Patel Logistics has issued 7 lakh shares to Frontline Strategy based on preferences and an additional 9.29 lakh warrants, at INR 115 each.

Experts are of the opinion that nearly one-third of the total operational costs of ecommerce companies are logistics spends.

Betting on faster delivery, ecommerce giants like Amazon, Flipkart and Snapdeal have all set up their own logistics arm.

Investors are not shying away from this sector either. In 2015 alone, several logistics companies had raised funds.


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