Blackstone proposes to make the investment through debt and equity
The partnership will help Allcargo’s growing third-party logistics business, the company said
Private equity (PE) giant Blackstone Group is investing ₹380 crore to buy a majority stake in the warehousing business of Mumbai-based Allcargo Logistics Ltd for developing logistics parks in key consumption hubs across India.
Blackstone proposes to make the investment through debt and equity, according to a statement issued by Allcargo on Monday.
“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," the statement said. “The transaction is expected to conclude in a phased manner over the next 12 months."
The partnership will also help Allcargo’s growing third-party logistics business, the company said.
Allcargo Logistics has completed several projects, while 6 million sq. ft (sq.ft) of Grade A logistics parks across the Delhi-National Capital Region (NCR), Bengaluru, Hyderabad, Ahmedabad, Pune, JNPT in Mumbai, Hosur and Goa, are in an advanced stage of development.
About 80% of the company’s warehousing portfolio is pre-leased, of which close to 1.5 million sq. ft is already income-producing. The company also has projects in the planning stage for another 3 million sq. ft.
Incorporated 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.
“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," said Shetty, the chairman of Allcargo Logistics.
“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," Shetty added. The warehousing transaction adds to Allcargo’s expansion plans, which include the acquisition of express logistics service provider Gati Ltd.
Last month, Allcargo had announced that it was buying a controlling stake in Gati for around ₹416 crore, to enter the express logistics space.
Gati has a wide-ranging customer base across corporate India, e-commerce companies, as well as small and medium enterprises. It has a presence across 727 districts and a service network catering to 19,000 PIN codes across the country.
For Blackstone, the investment would help the New York-based investment firm expand its footprint into logistics sector in India.
As of end-September 2019, Blackstone has invested $3.6 billion in India, its record for a single year in the country, according to a 20 October 2019 Mint report. So far, its total investments in the country across PE and real estate deals are more than $13 billion.
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