Merrill buys into Rajlaxmi’s new warehousing project

Merrill Lynch, the US-based investment bank, has picked up a minority equity stake in Hyderabad-based logistics provider Shree Rajlaxmi group’s upcoming warehousing development project for an undisclosed amount.

“The project is a high-quality warehousing development that offers solutions to customers to enhance efficiency in their distribution channels,” said Rajlaxmi group director Anish Damodaran. The group has identified additional locations to expand its presence on a pan-India basis, he added.

Indian warehousing sector has emerged as an attractive sector of investment for private equity. The sector offers significant growth opportunities, but currently there aren’t too many investors in this space, say industry executives. Private equity and real estate funds such as BlueRiver Capital and Kotak Reality have already invested in the logistics companies.

“Rajlaxmi has strong domain knowledge in warehousing and execution capabilities, which will enable the project to offer space well suited to customer requirements,” said Merrill Lynch Asia Pacific managing director and head of commercial real estate Timothy Grady.

With India’s GDP growing at over 7% per year and the manufacturing sector enjoying double-digit growth, the Indian logistics industry is at an inflection point, and is expected to reach a over $125 billion in 2010, an analyst said. It is expected that with increased geographical distribution of incomes in India, consumer markets are extending beyond Mumbai, Delhi, Bangalore, Chennai and Hyderabad.