India: Blackstone plans to invest $209m in JV with Allcargo Logistics

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Blackstone Group Inc. is in talks to invest 15 billion rupees ($209 million) in a venture with Allcargo Logistics Ltd. to build warehouses in India, people with knowledge of the matter said.

A real estate unit of the U.S. private equity firm is considering owning 51% of the venture, the people said, asking not to be identified as the discussions are private. Talks are still continuing and the contours of the deal may change, they said. Allcargo is talking with other investors as well, one of the people said.

Blackstone is expanding into logistics in India to tap the growing demand for warehouses as companies including Amazon.com Inc and Walmart Inc. spend billions to expand in the world’s fastest-growing e-commerce market. The introduction of a nationwide tax regime has also prompted demand for large storage spaces from retailers to ensure fast, last-mile delivery of goods.

Allcargo’s logistics division plans to build 5 million square feet of warehouses across India by 2021, the company said in a presentation in August. The company’s shares surged 10.4% at the 3:30 p.m. close in Mumbai, the most in almost five years.

Blackstone declined to comment, while a spokesman for Allcargo said the company doesn’t “comment on speculations.”

Ernst & Young LLP predicts companies will invest $7.8 billion in warehouses in the South Asian nation by the end of 2020. The sector has seen $266 million of investment so far this year, E&Y said in a report earlier this year.

Bloomberg