Blackstone Nears Deal to Buy Stake in Allcargo’s Unit

Blackstone Group Inc. has agreed to buy a stake in the warehousing unit of India’s Allcargo Logistics Ltd. for 3.8 billion rupees ($54 million) 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 on Monday, 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 Amazon.com Inc. and Walmart Inc. invest billions of dollars 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. Consultancy 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.