Gazeley plans to enter Middle East

Jamal Majid bin Thaniah, left, Group CEO of Port and Free Zone World, and Patrick McGillycuddy at the press conference in Dubai on Tuesday. (MOHAN)

Gazeley Limited, a British logistics company acquired by a Dubai World unit, is looking to enter the Middle East market and plans to have a big footprint in the logistics industry, said a senior official of the company.

Patrick McGillycuddy, CEO of Gazeley Limited, told Emirates Business the company hoped to tap into the growing logistics market in the Middle East to establish itself as one of the best providers of sustainable logistics space in the entire region.

"As one of the fast-growing emerging markets, we feel that our presence here will make good business sense for the company. The region can add a lot to the company's overall growth," he said.

Gazeley Limited, previously owned by Asda Wal-Mart, was recently acquired by Economic Zones World (EZW), a subsidiary of Dubai World, at a cost estimated at between $588 million (Dh2.15 billion) and $784m according to some reports.

It is the first acquisition by EZW as part of its strategy to expand into global markets and deliver a robust global platform to support the dynamic and complex supply chains of its customers.

The Middle East logistics market's growth is expected to double in the coming years on the back of increasing demand and the rising price of oil, and the region is fast becoming an international logistics hub between the East and West.

"We will leverage our understanding of the dynamics in the global logistics market to make our presence in the region beneficial to the growing local logistics industry," said McGillycuddy.

He said the company was already in high-level talks with some regional and international logistics companies about setting up projects for them in the region.

Gazeley was acquired by US retailer Wal-Mart in 1996 and, according to McGillycuddy, the company has been growing at a rate far beyond the expectations of its owners. But Wal-Mart decided to sell the company since as a logistics property developer, it did not belong to the retailer's core business activity. McGillycuddy is confident since the company's new owners specialise in property development, its international growth is set to rise further. He believes competition in the Middle East logistics industry will grow stiffer due to the immense potential that will continue to attract international logistics players.

"Every market we enter, there is competition and this keeps us sharp. Now that we will be able to offer something different to our clients, we believe that we will have an advantage in the market," said McGillycuddy.

Gazeley's business model will not change following the acquisition but instead will complement that of EZW, McGillycuddy said. Gazeley builds warehouses and then sells them to high-net worth buyers, such as pension funds or big logistics companies. EZW, instead, builds and retains the warehouses for use by its customers.

"We will blend the two business models. Gazeley will continue to deal with its customers who require logistics spaces to be developed for them and the next level would be to decide whether to hold the investment as part of the current EZW model, or sell it. Decisions will be based on circumstances," McGillycuddy said. The company, however, has no plans of entering other logistics sectors, such as transport.

There is currently an acute shortage of logistics space in the GCC due to increasing trade activity in the region that has outpaced the rate of development of spaces. Gazeley, founded in 1987, currently has its largest footprint in Western Europe with a lot of activity in France, Belgium, Spain, Germany and Italy.

The company also has an emerging footprint in China and most recently it has entered new markets in India and Mexico, where it sees immense potential.

"We want to tap into India's growing middle class, estimated at more that 250 million. Although Mexico is a mature market, we believe we have what it takes to win a big market share," said McGillycuddy.

To support international expansion, EZW is hoping to obtain 250,000 hectares (600,000 acres) of land in different countries where it will set up its activities.

The company has also put together a strategy team that will help to draw a map for its future and also suggest how best the integration of Gazeley and EZW can be done to achieve tangible results.

The strategy team will also look at how the strengths of both organisations could be blended and will also explore a range of issues from business development and branding to project delivery, and then recommendations will be made.

Gazeley's current customers include the world's largest 3PLs (third-party logistics) companies such as DHL and NDL, as well as retailers such as Wal-Mart, Tesco and Carrefour. Automotive customers include Volkswagen, Toyota and Honda.

Following the acquisition, all the company's 80 employees globally will be retained and will continue to work as a virtual team.