Mumbai: Mumbai-based Allcargo Global Logistics Ltd may increase its stake in rival firm Gateway Distriparks Ltd.
On 12 March, Sealand Terminals Pvt. Ltd, a unit of Allcargo, bought 6.1 million shares, or a 5.97% stake, in Gateway for Rs29 crore from Temasek Holdings Pte Ltd, the Singapore government’s investment arm.
On the same day, Allcargo chairman and managing director Shashi Kiran Shetty said it was a treasury investment and had nothing to do with consolidation. Analysts and company executives, however, said Allcargo could increase its stake.
“You may not see this immediately. In future this is a possibility. I cannot reveal further details,” said a senior Allcargo executive, who didn’t want to be identified citing the sensitivity of the issue.
“Though the management maintains the acquisition is purely a treasury investment, in our view it is (a) strategic move by Allcargo to consolidate its presence in the container handling space where Gateway Distriparks is a rival,” said a 18 March report of domestic brokerage Centrum Broking Pvt. Ltd.
An analyst with another local brokerage, who requested anonymity because he is not authorized to speak to the media, also said there is a strong possibility of Allcargo increasing its stake in Gateway.
The move comes in the backdrop of private equity firm Blackstone Group Lp. saying it would not put in any more money into Allcargo. Blackstone has invested Rs115 crore in Allcargo and was supposed to pay another Rs140 crore by converting warrants at Rs1,284 per share.
Ravi Jakhar, vice-president of corporate strategy at Allcargo, denied that the firm would increase its stake in Gateway or that Blackstone will not invest further. He pointed out that the conversion of warrants by Blackstone is due in September and Blackstone had already paid 20% of the agreed amount.
On Friday, Allcargo Global shares rose 1.61% on the Bombay Stock Exchange to close at Rs715. Gateway Distriparks fell by 2.06% to close at Rs50.