Blackstone proposes to make an investment through debt and equity and the transaction is expected to conclude in a phased manner over the next 12 months.
US-based private equity firm, Blackstone is in talks with Indian logistics company Allcargo to buy stakes in the latter’s warehousing business for over ₹380cr. This investment is a part of the PE firm’s plan to ramp up its real-estate portfolio in India.
“Blackstone will make an investment in the company’s (Allcargo Logistics) subsidiaries through a combination of equity and debentures up to Rs 380 crore,” said Allcargo Logistics Ltd in a BSE filing. “The partnership between the two firms proposes future investment for developing industrial and logistics parks across key markets of the company,” said the filing.
Although the filing didn’t mention the size of stakes it is selling to Blackstone but cleared it will retain a minority stake in these subsidiaries. “Allcargo will retain a minority stake in the various logistics assets and transfer its debt as it relates to these specific assets to their relevant subsidiaries,” Allcargo said in a statement.
According to the company statement, “The transaction is expected to conclude in a phased manner over the next 12 months.” Blackstone proposes to make an investment through debt and equity.
In a media statement Shashi Kiran Shetty, Chairman Allcargo said, “The Indian warehousing sector is scaling an expansionary curve backed by a robust regulatory environment and government thrust in boosting manufacturing, e-commerce, and organized retail. This sector has emerged as an attractive investment destination for global investors. Through this strategic tie-up, we reiterate our commitment and positioning to create a global benchmark in warehousing infrastructure and provide state-of-the-art warehousing solutions to our customers.” He further added, “Through this strategic tie-up, we reiterate our commitment and positioning to create a global benchmark in warehousing infrastructure and provide state-of-the-art warehousing solutions to our customers.”
Blackstone has been active in India since 2006 and has promised investments worth $10.4bn through private equity, real estate, and tactical opportunities. Out of this $10.4bn, the PE firm has invested over $5bn. Earlier in June 2019, Blackstone announced that the company has acquired a 97.7 percent stake in Aadhar Housing Finance Limited. It included the entire stake held by existing controlling shareholders Wadhawan Global Capital and Dewan Housing Finance Limited to be transferred to Blackstone. Late last month, Blackstone along with Hiranandani Group formed a $350mn investment platform dedicated to warehousing assets.
This recent transaction will help Allcargo in its expansion plans. Last year in December the company had completed the acquisition of express logistics service provider Gati Ltd. for ₹416cr.
So far, Allcargo Logistics has completed several projects with Grade A logistics parks across the National Capital Region, Bengaluru, Hyderabad, Ahmedabad, Pune, JNPT in Mumbai, Hosur, and Goa already in an advanced stage of development.
After the news of this transaction between Allcargo and Blackstone surfaced in the media, Allcargo’s shares rose to 6.1%.
Founded in 1993 by Shashi Kiran Shetty, Allcargo provides a wide range of services such as multimodal transport operations, container freight station operations, or inland container depot operations, and contract logistics and logistics parks.
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