Blackstone Buying Out India Shed Portfolio to Expand South Asia Logistics Holdings

Blackstone Buying Out India Shed Portfolio to Expand South Asia Logistics Holdings

AllCargo Logistics Mumbai

Allcargo House, the company’s Mumbai headquarters

Blackstone has agreed to buy out the remaining warehouse business of Mumbai-based Allcargo Logistics by taking full ownership of a set of companies said to hold 5.5 million square feet (511,000 square metres) of properties.

The US fund management giant is acquiring the logistics assets in India’s National Capital Region, Bengaluru, Hyderabad and Mumbai by acquiring the entire interest in six warehousing subsidiaries of Transindia Real Estate, a spin-off of Allcargo, after buying majority stakes in several of the entities earlier this year.

Allcargo, the multi-modal logistics specialist led by chairman Shashi Kiran Shetty, announced in February that it had sold part of its logistics park business to funds managed by Blackstone, giving the Manhattan-based firm a 90 percent stake in certain subsidiaries as the demerged Transindia retained a 10 percent share of the units.

In a letter dated 4 June, Transindia notified Allcargo of plans to divest of its remaining 10 percent stakes in five subsidiaries and sell its 100 percent interest in a sixth unit.

“The definitive transaction documents are yet to be executed between the relevant parties and once the transaction is completed, we will intimate about the same by giving further information,” Transindia managing director Jatin Chokshi said in the letter, adding a request for Allcargo to inform India’s stock exchanges of the proposed transaction.

Winding to a Finish

No deal value was cited for the subsidiaries in question, but Allcargo disclosed in January 2020 that Blackstone would acquire part of its warehousing business with an investment of up to INR 380 crore ($53.6 million) in subsidiaries through a combination of equity and debentures. The US firm was said to be taking minority stakes to be acquired in phases.

Stephen Schwarzman Blackstone

Blackstone co-founder and chairman Stephen Schwarzman

On an earnings call in February of this year, Allcargo chief strategy officer Ravi Jakhar announced the “consummation” of the Blackstone transaction, which had been “pending for reasons beyond our control for a long period of time”. With the agreement, Allcargo received additional cash inflow of INR 135 crore and removed debt of INR 295 crore from the books, Jakhar said.

Blackstone’s involvement in Allcargo dates back as far as 2009, when the investment giant had already committed $75 million to the Indian company and placed former executive Akhil Gupta on the Allcargo board.

In 2019, Bloomberg reported that Blackstone was in talks to invest $209 million in a venture with Allcargo to build warehouses in India, with a real estate unit of the US firm considering owning 51 percent of the JV.

Allcargo’s logistics division oversees about 70 warehouse locations across India with 5 million square feet (464,515 square metres) of space.

Accumulation Strategy

India’s Economic Times reported this week that Blackstone was looking to expand its warehouse portfolio in the country from 40 million square feet at present to 100 million square feet in the next 3-5 years.

In 2021, the private equity titan led by co-founder and chairman Stephen Schwarzman bought out a logistics joint venture of its rival Warburg Pincus and India’s Embassy Group in 2021 for a reported $700 million, adding 22 million square feet to its footprint.

Blackstone had taken a 50 percent stake in a $350 million warehouse joint venture with Mumbai-based developer Hiranandani Group in 2019.

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