Mumbai: Logistics services provider Allcargo Logistics Ltd is seeking to set up a warehousing/logistics park platform and is in talks with investors to raise ₹ 1,000 crore for it, two people aware of the development said.
Allcargo provides services for exporters and importers, e-commerce logistics, contract logistics for companies as well as coastal shipping.
“Allcargo is planning a major foray into logistics parks and warehousing space and they are in advanced talks with a global strategic investor for a tie-up. They are looking to raise ₹ 1,000 crore in the warehousing tie-up. The discussions are at an advanced stage and the transaction is expected to be closed in another two to three months," said a person aware of the development, requesting anonymity as he is not authorized to speak with the media.
Allcargo has appointed investment bank Avendus Capital to advise it on the fundraise, he added.
Emails sent to Adarsh Hegde, joint managing director at Allcargo Logistics did not elicit any response. A spokesperson for Avendus Capital declined to comment on the development.
For the quarter ended 31 March, Allcargo Logistics reported a consolidated revenue of ₹ 1,536.33 crore, as against a revenue of ₹ 1,362.81 in the previous year. The company reported a profit of ₹ 11.6 crore in the quarter, down from a profit of ₹ 57.24 crore in the same period last year.
Post the implementation of the goods and services tax (GST), India has seen a lot of activity in the warehousing space with several investors having announced plans to deploy hundreds of millions of dollars in creating greenfield warehousing projects as well as for acquiring existing assets.
The Indian logistics industry, which is worth around $160 billion, is likely to touch $215 billion in the next three years with the implementation of GST, the Economic Survey 2017-18 said. With the implementation of GST, the Indian logistics market is expected to reach about $215 billion in 2020, growing at a CAGR of 10.5%, the survey added.
This growth potential has attracted several global investors to the Indian logistics and warehousing space.
Earlier in May, Mint reported that Proprium Capital Partners, an independent asset manager set up by former employees of Morgan Stanley’s real estate private equity arm, is investing around $100 million in Hyderabad-based Musaddilal Projects Ltd to build a logistics/warehousing platform.
In August, LOGOS Group and Assetz Property Group, based in Sydney and Singapore, respectively, partnered to set up a logistics and warehousing platform that would invest to build and manage specialized logistics and industrial parks in India. LOGOS is an integrated logistics real estate specialist, with operations in Australia, China, South-East Asia. Assetz Property Group has had a fully operational real estate firm here.
In October, LOGOS India raised $400 million in equity capital from Ivanhoé Cambridge, a real estate subsidiary of Caisse de Dépôt et Placement du Québec (CDPQ), Canada’s second largest pension fund, and Vancouver-based QuadReal Property Group.
In May 2017, IndoSpace and Canadian pension fund CPPIB created a joint venture, IndoSpace Core, to acquire and develop modern logistics facilities in India. CPPIB has made a significant commitment of around $1 billion towards IndoSpace’s assets. Currently, IndoSpace’s portfolio includes around 28 logistics and industrial parks across the country.
Singapore-based Ascendas-Singbridge Group announced a joint venture with Firstspace Realty, in June 2017, to enter the Indian industrial logistics and warehousing market. They jointly aim to invest $600 million over the next five to six years and develop around 15 million sq. ft of space.
In April, Embassy Industrial Parks, a joint venture between real estate developer Embassy Group and private equity firm Warburg Pincus India Ltd, bought 24 acres in Gurugram, Haryana, to build an industrial and warehousing hub at a cost of ₹ 140 crore, Mint reported.