Indospace, backed by PE fund Everstone Capital and CPPIB, signed an exclusivity agreement last week and engaged in exclusive talks for acquiring the assets, said two people aware of the developments.
PE fund Warburg Pincus owns 70% stake in Embassy Industrial Parks while Bengaluru-based Embassy Group owns the remaining 30%.
ESR, a leading Asia Pacific logistics real estate platform, is another contender for the acquisition. Hong Kong-based ESR has $22 billion of assets under management and is also backed by Warburg Pincus.
With a total portfolio of 15 million sq ft, Embassy Industrial Parks is developing warehousing projects at Chakan in Pune, Hosur in Bengaluru, Farrukhnagar and Bilaspur in Delhi-NCR, Kothur in Hyderabad and Sriperumbudur in Tamil Nadu.
Embassy’s industrial and warehousing development is spread across eight cities with 10 million sq ft of development completed and over 35 million sq ft of ongoing and planned development. These industrial and warehousing solutions are targeted at industry verticals like ecommerce, automobile ancillaries, FMCG and retail.
Embassy, along with Blackstone, launched India’s first real estate investment trust last year to raise Rs 4,750 crore through public issue. Embassy owns WeWork India, with 34 centres in six cities comprising 60,000 desks and 40,000 members.
Spokespersons from Indospace and Embassy declined to comment while mail sent to Warburg Pincus did not elicit response till press time.
With a portfolio of around 36 million sq ft across 35 logistics and industrial parks, including developed parks, Indospace has the largest network of industrial and warehousing parks in India. In 2018, IndoSpace had raised $1.2 billion through its logistics real estate fund, IndoSpace Logistic Parks III.
Indospace is backed by GLP, a global investment manager and business builder in logistics and real estate technologies, and Realterm, a $4 billion AUM global real estate operator. In 2017, IndoSpace Core was established as a JV between IndoSpace and Canada Pension Plan Investment Board (CPPIB), where CPPIB had committed $500 million for a significant majority stake.
Indospace’s tenants include Amazon, Harley-Davidson, DHL, Adidas, Tata, Bosch, Nippon Express, Nissan Motor, PepsiCo and Schneider.
The industrial and warehousing sector in India has attracted significant investor interest since 2017 owing to the reforms introduced by the government. As per Colliers International, the sector has attracted interest from multiple large institutional investors, with investment inflows of Rs 2,7800 crore ($3.7 billion) since 2017. Between 2017 and H1 2020, the sector garnered a considerable 17% share of total private equity real estate investment.
Investment activity may be muted for the next year due to slower decision-making by investors because of the ongoing pandemic. However, the inflow from both foreign and domestic funds is expected to grow over the next 2-3 years as existing participants expand their portfolio and new players enter the market, Colliers International said in a report titled ‘Revitalizing the Indian industrial and warehousing sector’.