Logistics emerges as key PE fund target amid $1.1bn Indian investments

New report says logistics and warehousing seem to be the new real estate favourites for private equity funds
Logistics emerges as key PE fund target amid $1.1bn Indian investments
The southern Indian cities of Bengaluru (pictured), Chennai and Hyderabad saw maximum interest by PE investors.
By James Mathew
Thu 20 Jun 2019 01:30 PM

Logistics and warehousing segments of India’s real estate sector seem to be the new favourites for private equity funds, who have invested $1.1 billion over the past two years, according to new research.

This is in sharp contrast to the zero investments by PE funds into these two segments during 2015 and 2016, the report by Anarock said.

The total PE fund investments in India’s real estate sector amounted to $9.7 billion between Q1 2017 and Q1 2019.

The southern Indian cities of Bengaluru, Chennai and Hyderabad saw maximum interest by PE investors. The other cities which also attracted significant PE investments are Mumbai and Pune.

Among the largest PE investments during 2017-19 was Canada-based CPPIB’s $500 million investment in IndoSpace projects across cities like Bengaluru, Chennai, Pune, Mumbai and Delhi.

Warburg Pincus’ $180 million investment in Embassy Group for a project in Bangalore and Proprium Capital Partners’ $100 million investment in Hyderabad-based Musaddilal Projects were among the other major PE deals, the report said.

“Favourable government policies, strong economic fundamentals and growth in organized retail and e-commerce in the Indian market are the driving factors for the newly found interest of PE investments in these segments,” the report noted.

Infrastructure status, the multi-modal logistics park policy and implementation of GST have led to private equity firms taking greater interest in logistics and warehousing sector in India in the recent years, it added.

The rapid ramping up of e-commerce activity leading to a corresponding rise in demand for logistics and warehousing in both Tier I and II markets, coupled with the increasing use of technology is expected to further boost these two segments in India, as it has globally, it further said.

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