PE Ahoy!

New Vernon, a US-based private equity firm, spotted Shashi Kiran Shetty’s Allcargo Global Logistics company before any other PE player could—in January 2006 when it picked up a 6.02 per cent stake in Allcargo (six months before it made an initial public offering) at Rs 685.88 per share. Today, New Vernon still holds that stake in the company, whose current price hovers around Rs 800 per share (it had touched an all-time high of Rs 1,150). New Vernon stayed on despite the one year lock-in period expiring on December 2006.

New Vernon isn’t the only PE major that seems to be convinced by Shetty’s entrepreneurial abilities. The Blackstone Group bought out debentures and warrants amounting to Rs 242 crore in Allcargo; they will be converted into equity shares at Rs 934 to Rs 1,284 per share after 18 months. Blackstone will end up with a little over 10 per cent in Allcargo. Shetty and his family still own a comfortable 80 per cent stake in the company, which offers enough scope for future dilution (the public owns 20 per cent). “The funds would be utilised for diversification within our core business,” says Shetty, Chairman and Managing Director, Allcargo.

Shetty has lined up a Rs 400-crore capital expenditure plan, which includes the purchase of mobile cranes, setting up of inland container depots and container freight stations, as well as logistics parks. Last fortnight, Allcargo also inked a joint venture with Container Corp for setting up a CFS at Dadri in Greater Noida in UP.

— Anand Adhikari