Blackstone plans to pick up stake in Allcargo warehousing business

Blackstone Group Inc is acquiring a part of Allcargo Logistics Limited’s warehousing business, as the US-based private equity firm continues to ramp-up its large portfolio of real estate assets in India.

Mumbai-listed Allcargo said in a stock-exchange filing that Blackstone will invest up to Rs 380 crore ($53.6 million) in the company's warehousing subsidiaries through a combination of equity and debentures.

Allcargo, however, did not reveal the size of the stake it is planning to sell to Blackstone, but said that it will retain a minority stake in these subsidiaries.

Allcargo said in a statement that the company and Blackstone is planning to make further investments in future, to develop industrial and logistics parks across key markets of India.

The transaction is likely to conclude in a phased manner over the next 12 months, subject to customary closing conditions and achievement of certain milestones.

The announcement comes barely weeks after Blackstone formed a $350 million investment platform with Mumbai-based Hiranandani Group dedicated to warehousing assets, last month.

Blackstone has so far invested over $5 billion in the country's real estate across commercial, retail, hospitality and residential segments. With the latest deal, it has added a new asset to its portfolio.

India’s warehousing and logistics sector has gained favour among investors over the past few years, thanks to factors such as the government’s decision to grant infrastructure status to the segment and implementation of the goods and service tax. Many global firms have bet on the segment, either directly or through tie-ups with local developers.

The Xander Group last year set up a platform for warehousing assets. The real estate arm of Morgan Stanley Investment Management recently bought a majority stake in a project of Gurgaon-based Pragati Warehousing. Last year, it had bought a majority stake in KSH Infra Pvt Ltd, a Pune-based industrial logistics park developer.

The Indian arm of global logistics player ESR has tied up with Future Group to develop warehousing parks. Warburg Pincus has formed a platform with Embassy Group to develop warehousing assets while Canada Pension Plan Investment Board has backed warehousing developer IndoSpace.