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Container logistics company Gateway Distriparks has bought the stake held by private equity firm Blackstone in its subsidiary Gateway Rail Freight for ₹810 crore, a deal that will help in consolidating the two businesses within the group.
In 2010, Blackstone invested ₹300 crore in Gateway Rail for a stake of up to 49.9 per cent through compulsorily convertible preference shares (CCPS).The buyback helps GDL raise its stake in the subsidiary to 99.8 per cent, according to a company statement.
Blackstone earned 2.7 times its investment in eight years.
“Going forward, consolidation at Gateway Group will be possible with this because both the businesses are quite alike. So, there is the possibility of consolidation and synergies between the two businesses. It will be possible to run the two businesses tightly under the group,” said Sachin Bhanushali, Director & CEO at Gateway Rail Freight.
Gateway Rail Freight runs container trains and inland container depots while Gateway Distriparks runs container freight stations.
Bhanushali said the two businesses will not be merged. “There are some tax reasons why the merger cannot be done; both the entities have to be run separately. As Gateway Rail has some tax concessions under Section 80-IA, unless these are availed fully, the merger cannot happen. In order to avail the tax concessions, it will have to exist as an independent company,” Bhanushali said.
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