Private equity firm Everstone Group-backed industrial real estate company IndoSpace and modern logistics and technology-led solutions provider GLP have entered into a long-term strategic partnership.
As part of the joint venture (JV), GLP will co-invest in IndoSpace’s managed investment vehicles, the companies said in a joint statement on Sunday. GLP’s real estate platform is one of the largest in the world, spanning about 700 million square feet. Through this partnership, GLP will also become an investor in IndoSpace Core, a joint venture established in 2017 by IndoSpace and Canada Pension Plan Investment Board (CPPIB), which is focused on acquiring and developing modern logistics facilities in India. CPPIB had initially committed $500 million and owns a significant majority stake into IndoSpace Core.
“GLP, the best and largest global name in our business, has entered India and is exclusively with us. It is a partnership for the long-term and a strong venture wherein IndoSpace will be rebranded with the tagline: A GLP Joint Venture” said Sameer Sain, co-founder and chief executive officer (CEO), Everstone Group. Sain, who is also one of the co-founders of IndoSpace, declined to divulge further details, including the quantum of investment. IndoSpace is a joint venture between private equity firm Everstone Capital and US-based Realterm Group.
The JV will also enable IndoSpace to leverage GLP’s fund management, development and operational expertise and resources, as well as its extensive global customer network. “They are the global leader in the logistics space. GLP’s expertise, scale, technology and global relationships will give us a massive advantage and enable us to deliver significant value to our customers and investors,” added Sain.
IndoSpace plans to build a pipeline of 120 million square feet of modern logistics infrastructure. It currently has 12 million sq. ft of fully developed and stable leased assets, with another 20 million in brownfield construction, as well as a pipeline of 30 million sq. ft in India. “We have hit the hard cap of our third IndoSpace fund at $550 million. We have capital and with the enhanced technical wherewithal of GLP, we can just do so much more. We will look at expanding our capabilities and also look at cargos, airports, etc.”
IndoSpace has raised $584 million across two industrial real estate funds. The first, IndoSpace Logistics Parks I, had raised $240 million in 2009. IndoSpace Logistics Parks II had raised $344 million in 2014. Currently, IndoSpace’s portfolio includes 28 logistics and industrial parks across the country. Its key tenants include Amazon.com Inc., Nissan Motor Co., DHL Supply Chain India Pvt. Ltd, PepsiCo India Holdings Pvt. Ltd and the Bosch Group.
GLP with $50 billion in AUM in realty and PE, owns and operates 667 million sq ft. It has 2,900 completed properties in 1,200 logistics parks globally. It has struck similar partnerships. For instance, in 2017, it had entered Europe with the acquisition of Gazeley, a premier developer, investor and manager of logistics warehouses and distribution parks.
“This partnership is highly strategic and mutually beneficial. IndoSpace is an experienced partner which shares similar values and culture as GLP. It provides us with immediate scale to capitalize on the early growth stages of India’s rapidly modernizing logistics landscape and further expand our logistics ecosystem,” said Ming Mei, co-founder and CEO, GLP.
According to a 2018 report by real estate consulting firm Knight Frank, government initiatives have provided strong tailwinds to the Indian warehousing and logistics sector.
“The government’s thrust to the sector such as giving infrastructure status to the logistics sector, the ‘Make in India’ programme, development of multimodal transport networks and initiatives to set up industrial corridors like Delhi Mumbai Industrial Corridor (DMIC), Delhi Kolkata Industrial Corridor and logistics parks have propelled the cause,” the report said.
Emergence of exit routes, such as real estate investment trusts (REITs), are also major steps towards attracting more institutional capital for the sector. “Currently, the market for REITs in India is at a very nascent stage and it would take time to evolve. Once the market for REITs matures, institutional investors will be able to get a credible exit avenue to gain from their warehousing investments by listing their warehousing assets through REITs,” the Knight Frank report added.
As per the Economic Survey 2017-18, the Indian logistics sector is expected to touch $215 billion by 2020, from the current $160 billion.
The warehousing and logistics space has witnessed a host of deals in recent times. Last year, logistics investment and development firm LOGOS India had raised $400 million from Ivanhoé Cambridge and Vancouver-based QuadReal Property Group.
LOGOS India seeks to develop and own modern logistics facilities across major cities, including Mumbai, Pune, Chennai, the National Capital Region (NCR), Bengaluru, Hyderabad and Ahmedabad.
Singapore-based Ascendas-Singbridge Group had announced a joint venture with realty firm Firstspace Realty to enter the industrial logistics and warehousing market with an investment of $600 million over the next 5-6 years to develop around 15 million sq. ft of space.
Source: Mint