January 13, 2020 10:00 AM, EST

Blackstone Nears Deal to Invest in Warehousing in India

BlackstoneVictor J. Blue/Bloomberg News

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Blackstone Group Inc. has agreed to buy a stake in the warehousing unit of India’s Allcargo Logistics Ltd. for $54 million (3.8 billion rupees) as the U.S. firm seeks to capture the demand in the world’s fastest growing e-commerce market.

Allcargo’s board approved the investment Jan. 13, it said in an exchange filing, confirming an earlier Bloomberg News report. The U.S. private equity firm could further raise its stake over the next 12 months based on the achievement of pre-agreed performance milestones, which could leave Allcargo with a minority interest, the statement said.

Shares of Allcargo jumped as much as 6.1% to the highest level since Nov. 8. The stock rose 4.4% at close.

Blackstone is expanding into logistics in India to tap the growing demand for warehouses as companies, including Inc. and Walmart Inc., invest billions of dollars in the world’s fastest-growing e-commerce market. The introduction of a nationwide tax regime also has 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. Consultancy firm EY predicted in a report last year that companies will invest $7.8 billion in warehouses in the South Asian nation by the end of 2020.

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