Allcargo about to sell its project logistics

MUMBAI : Allcargo Logistics is in final talks to sell its business of project logistics, said a person in the know, as the company aims to restructure its business, focussing on core segments with an asset-light model.

“The company will have an update in December, possibly on signing of the term sheet with the buyer,” said the person, who didn’t want to be named.

The company is also looking at acquisitions in Europe in the multimodal transport operations (MTO) space and in

India in the contract logistics space. Those may gain significant traction in the next few months.

The project logistic business, which entails the moving of big machines such as boilers and windmills, is a non-core business for Allcargo which it is looking to exit. The person cited above said the buyer is a strategic player and not a private equity investor.

Allcargo is also in the process of looking for a buyer for its crane rental business.A transactionto sell its logistics parks business to blackstone has been delayed due to pending regulatory approvals.

We are divesting our non-core; we are divesting even as we acquire in our core businesses,” chief strategy officer Ravi Jakhar told . “We want to focus on core business and we want to make sure that core businesses have everything that is required to grow.”

He didn’t elaborate on the businesses it wants to sell or where it wants to make acquisitions.

The core business for the company entails express and contract logistics, international supply chain and MTO, as well as container freight stations and inland container depots.

The company is looking at getting into container terminal operations and has responded to a request for qualification document floated in August by the Jawaharlal Nehru Port Trust, or the Nava Sheva port, India’s biggest container port.

The tender was for the selection of a private operator for the upgrade, operation, maintenance and transfer of Jawaharlal Nehru Port Container Terminal through a public-private partnership for 30 years

The company wants to restructure its core businesses so that it unlocks further shareholder value and makes it easier to raise capital for expansion and acquisitions, said Jakhar.

Now, express and logistics are sitting in the Gati subsidiary, contract logistics is sitting in another subsidiary (Avashya CCI), 15% of the multimodal transport operations business is in India while the rest is in the overseas Belgium subsidiary, ECU Worldwide. If we aim to raise capital, it needs to be in a neat and clean structure. That is where the whole restructuring exercise is aimed,” he said.

Meanwhile, the company has appointed New York-based investment bank Jefferies Financial Group to raise funds by selling a part of its stake in ECU Worldwide. Jakhar confirmed the information,

Now, express and logistics are sitting in the Gati subsidiary, contract logistics is sitting in another subsidiary (Avashya CCI), 15% of the multimodal transport operations business is in India while the rest is in the overseas Belgium subsidiary, ECU Worldwide. If we aim to raise capital, it needs to be in a neat and clean structure. That is where the whole restructuring exercise is aimed,” he said.

Meanwhile, the company has appointed New York-based investment bank Jefferies Financial Group to raise funds by selling a part of its stake in ECU Worldwide. Jakhar confirmed the information, but said it is still in initial stages. He denied reports that Allcargo is looking for a valuation of $1 billion for ECU Worldwide, which is its biggest money-spinner.

In July, ECU acquired the business of Swedish logistics company Nordicon Group. Jakhar said 20% of the network integration was done last month while the rest was completed this month.