Blackstone seeks IPO for portfolio firm Gateway Rail Freight

This could be first IPO-led exit activity for the PE firm in India

Gateway Distriparksमुंबई Mumbai: Private equity firm Blackstone has sought a public listing of Gateway Rail Freight Ltd (GRFL), which could open the window for an exit from its over five-year-old investment in the subsidiary of Gateway Distriparks Ltd (GDL), as per a stock market disclosure.

Blackstone has written to Gateway Distriparks seeking an IPO of GRFL in accordance with the terms of the share subscription & shareholders agreement dated November 9, 2009, Gateway Distriparks said in the filing.  An email query sent to Prem Kishan Gupta, Deputy Chairman & MD and R Kumar, deputy CEO & CFO of Gateway Distriparks, for more information, did not elicit any response till the time of filing this article.

Responding to a separate email query to the spokesperson of Blackstone on whether it wants to fully or partly exit its investment, the firm said it did not wish to comment on the development.

Blackstone had invested close to Rs 300 crore in New Delhi-based Gateway Rail Freight Ltd back in 2010. Bulk of this is through 120 million Compulsory Convertible Preference Shares (CCPS) of Rs 24.65 each. These CCPS can be converted into equity at the ratio of 167 shares for every 100 CCPS.

On conversion, Blackstone could hold around 40 per cent stake, after factoring in conversion of preference shares by Gateway Distriparks in the subsidiary.

Gateway Rail Freight provides intermodal logistics and operates its own Inland Container Depots/Dry Ports. It operates rail linked facilities at Garhi-Harsaru (Gurgaon, Haryana), Ludhiana (Punjab), Asaoti (Faridabad, Haryana) and Kalamboli (Navi Mumbai).

The company owns and operates a fleet of 21 trains and 230+ road trailers at its rail linked terminals. Gateway Rail operates regular container train service from these ICDs/Dry Ports to the maritime ports at Nhava Sheva, Mundra and Pipavav, transporting import and export as well as domestic containers.

For the year ended March 31, 2014, it had turnover of Rs 573 crore with net profit of Rs 52.1 crore.

For Gateway Distriparks this could mean another of its subsidiaries going public. Recently Snowman Logistics Ltd, an integrated temperature controlled logistics services unit of the firm, got listed. The firm, which counts Norwest Venture Partners and IFC as investors had a blockbuster listing in September, after its IPO was over-subscribed nearly 60 times.

Shares of GDL last traded at Rs 382.85 each, up 4.9 per cent on BSE in a strong Mumbai market on Monday.

For Blackstone, which also separately owns over 14 per cent stake in Allcargo Logistics, this could mark the first IPO-led exit opportunity in India. Another portfolio firm Emcure Pharma had filed for its IPO a couple of years ago but later decided not to go ahead with it. Blackstone eventually exited through a secondary PE deal where it sold its stake to Bain Capital.