Archana Shukla

Mumbai: Buyout firm Blackstone Group LP is taking a 10.38% stake in multi-modal logistics player Allcargo Global Logistics Ltd for Rs 242 crore.

Allcargo plans to deploy the proceeds for acquiring more cranes and setting up inland container depots (ICDs) in the country and for expansion in the Middle East.

As per the deal, Allcargo would immediately receive Rs 100 crore through issue of 1.1 million fully and compulsorily convertible debentures (FCCDs) at Rs934 per FCCD.

It would also receive another Rs28 crore as advance on the 1.5 million warrants Blackstone will subscribe at Rs194 each and the remaining Rs114 crore would come at the end of 18 months. The warrants can be converted at between Rs934 and Rs1,284 each, Allcargo said.

Shashi Kiran Shetty, chairman and managing director, Allcargo said, “It has also been agreed that if Allcargo achieves an Ebidta of Rs 190 crore in FY08, we would receive another Rs55 crore from Blackstone as a milestone payment.”

This would be followed by another Rs22 crore by 2010, totalling Rs 340 crore investment by the private equity firm, he added.

Blackstone additionally has an option to raise its stake to 14.99% through purchases in the market.

The promoters said that the allotment would bring their shareholding in Allcargo down to 72% by 2009 from the current 81%.

The private equity firm will have a board representation in Allcargo. Blackstone has earlier taken minority stakes in companies such as Nagarjuna Construction and MTAR Technologies, besides a controlling stake in garment exporter Gokaldas Exports Ltd.

Allcargo had earlier announced a roadmap to set up eight container freight stations and ICDs and has already started work on five of them.

The company is also investing Rs150 crore in acquiring cranes of various capacities. It has taken a loan of Rs100 crore from Axis Bank for this and plans to raise Rs50 crore overseas through ECU Lines, the Belgium based company it acquired in 2006.

The company is also expanding in Dubai by setting up a 40,000 sq ft warehouse at a cost of $12 million over the next 9-10 months.

Further, it is extending its crane hiring business in the Middle East by acquiring 12 cranes for $5 million in the first phase.

“The market in Middle East is very encouraging and since our existing warehouse in Dubai is completely used, we see great opportunity there,” Shetty said.

The logistics provider is also actively pursuing port development and has identified some projects on the West Coast of India, in which it will be the lead investors.

“The project is in a very initial stage and will take at least six months before it can be finalised,” Shetty said.

Source : DNA