GIC to join warehouse party with K Raheja

Mumbai: Singapore sovereign wealth manager GIC is set to join the foreign investor rush into India’s industrial logistics and warehousing industry. GIC, formerly Government of Singapore Investment Corporation, is floating a joint venture with the Mumbai-headquartered developer

K Raheja Corp

to build and acquire warehousing parks in Asia’s third-largest economy, people directly aware of the matter said.

GIC and Raheja have signed preliminary agreements to build and acquire warehousing facilities. “They are looking at a combination of land parcels for greenfield developments and existing facilities (which can be upgraded) through acquisitions,” said a person advising on the matter. The joint venture could invest about $300 million in the initial phase of platform creation.

This will be K Raheja’s second attempt in the logistics and warehousing business after signing an equal joint venture with US giant ProLogis a decade ago, a deal which collapsed following the financial crisis in 2008. GIC has a separate partnership with K Raheja to develop tenanted office portfolio on the Siemens land at Worli (in Mumbai), which they had jointly acquired for Rs 610 crore some time ago.

Calls and text messages to senior executives at K Raheja and GIC in India went unanswered. Canadian Pension Plan Investment Board (CPPIB),

Warburg Pincus

,

Ivanhoe Cambridge

and

Macquarie Group

have unveiled investments into the country’s industrial warehousing, which is poised for fast-paced growth on the back of the GST introduction, rising consumption themes and expanding organised retail. CPPIB has committed almost $1.2 billion to show up with almost 25 million sq ft of warehousing space in partnership with IndoSpace, the largest domestic provider of industrial warehousing.

Industry estimates suggest that supply of grade-A warehousing space almost doubled to 30 million sq ft this fiscal, up from 15 million last year. The inflow of foreign capital has been the key trigger for the frenetic ongoing build-up. Warburg Pincus has an operating joint venture with southern developer Embassy Group, while Ivanhoe Cambridge and Macquarie-backed Asian logistics giant Logos has partnered with Assetz Property Group for a $400-million investment into the sector.

Hong Kong-headquartered warehousing provider e-Shang Redwood and Singapore-based Ascendas-Singbridge are among the international operators foraying into the Indian market. Faced with a volatile residential real estate market, several Indian developers have turned attention to building a portfolio of rental income-generating commercial assets. After hectic activity in tenanted office buildings, investors and developers are now focusing other rent-yielding asset classes, of which industrial warehousing seems to attract much attention right now.