Private equity major Blackstone Group has acquired Embassy Industrial Parks at an enterprise valuation of Rs 5,250 crore from Warburg Pincus and Embassy Group in the largest yet logistics and warehousing deal in the country.
Embassy Industrial Parks – a 70-30 joint venture between Warburg Pincus and Embassy – has 22 million square feet logistics assets across the country’s major consumption centres, including metros.
The deal will be completed in two tranches, with nearly 11 million sq ft logistics and warehousing assets changing hands in the first phase to be consummated immediately, officials said.
The rest approximately 11 million sq ft will be acquired in the next tranche, taking the deal to conclusion in a month from now, they said. All the concerned entities have signed on the dotted lines.
ET was first to break the story on the proposed deal in February.
This is one of the largest private equity deals this year in the middle of the pandemic.
“Logistics is one of the firm’s highest global conviction themes, anchored by our belief that ecommerce trends will further fuel demand for logistics space especially near city centres,” said Asheesh Mohta, head of Real Estate India Acquisitions at Blackstone. “This is particularly true in India, where ecommerce is in its nascent stage of development and has tremendous opportunities driven by positive trends in urbanisation, domestic consumption, and the emerging retail sector, which remains heavily underpenetrated compared to major economies around the world.”
With this complete buyout transaction, Blackstone will become the country’s largest warehousing space landlord with over 40 million sq ft logistic parks in assets as it already has 18 million sq ft warehousing assets in its portfolio through its stake buys in Hiranandani Group and Allcargo Logistics’ warehousing assets.
“India is a unique market with solid growth potential, supported by its global leadership in information technology, strong talent pool, and government initiatives to attract foreign investment such as the introduction of a simplified tax structure and infrastructure projects,” said Tuhin Parikh, head of Real Estate India at Blackstone.
Embassy Industrial Parks’ warehouses are located across major industrial hubs including Bengaluru, Delhi-National Capital Region (NCR), Hyderabad, and Pune, and are leased to leading ecommerce and retail players.
“The partnership with Warburg Pincus has been extremely valuable to us and they will remain our trusted partners. This transaction between Embassy Group and Blackstone further strengthens and reinforces our partnership,” said Jitu Virwani, chairman and managing director of Embassy Group. “We are extremely focused on consolidating our resources towards the growth of our core businesses of office and residential development and management. This transaction with Blackstone Real Estate, along with the upcoming merger with Indiabulls Real Estate, is a strategic move in that direction.”
Indian logistics and warehousing sector is headed towards a transformative growth. The government’s decision to accord infrastructure status to the industry is allowing developers access to low-cost funds for development.
Given the fundamental shifts across the industrial and logistics sector in the last couple of years, along with rising demand for quality space, more developers are likely to build compliant, large-sized spaces.
As ET had reported earlier, after becoming the owner of India’s largest office real estate portfolio, Blackstone has now set its sights on the country’s burgeoning warehousing and logistics sector.
Being one of the largest owners of warehousing spaces globally, the US-based private equity major is moving swiftly to create a large portfolio in India and market watchers say that it is in advanced talks with developers to acquire and build warehousing assets here.
It has an alliance with Hiranandani Group to identify and build new warehousing assets besides a 90% stake in Allcargo Logistics.
Globally, Blackstone has acquired logistics assets of more than 1.2 billion sq ft since 2010. It is among the top 10 business groups in India by total value of assets and this transaction is expected to help reinforce Blackstone’s leading position in office, retail and logistics.
