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Troubled Australian logistics operator Toll Group is set to sell its express division to Australian private equity house Allegro Funds for a reported A$10m, leaving the country’s largest 3PL with forwarding and contract logistics operations.

Although neither Toll nor Allegro confirmed the size of the deal, Loadstar Premium revealed that Toll Group owner Japan Post, which bought the company for A$6.5bn (US$5.1bn) in 2015 and was forced to write off A$4.7bn two years later, has disclosed net proceeds of $7.8m from the deal.

Toll Group Express (TGE) accounted for some 41% of group revenues last year, amounting to A$3.2bn, but has found making a profit far more difficult and that has hit the group’s balance sheet – group net debt in fiscal 2020 surged A$5.7bn from A$2.7bn the year before, although it is unclear how much of that due to the express division, which managed to post a small operating profit in the final quarter of the year.

However, Allegro, which has appointed fund founder Adrian Loader as the new TGE chair, said it had secured A$500m in funds which it intends to invest into the business.

“The business has faced challenges, but we are excited by the opportunity ahead and have great confidence that Toll Global Express can realise its full potential,” Mr Loader said.

“Allegro is committed to a transformation programme, underpinned by $500m in funding to support and grow the business. The business has high-quality assets, is number one or two in its core market segments and will be supported by strong local management,” he added.

Toll Group said the deal was expected to close by the end of June and MD Thomas Knudson said it would now focus on its freight forwarding and contract logistics operations.

“We’ll retain the scale and expertise to manage complex supply chains across diverse markets in our key markets in Asia-Pacific,” he said, noting that shifting supply chain dynamics, the rise of e-commerce and the continued economic development of Asia continued to present opportunities for Toll.

“We’ll draw on our core capabilities, global reach and sector expertise – as well as our trusted relationships with customers, governments and the broader supply chain industry – to forge a new and exciting future for the business,” he said.

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