The Canada Pension Plan Investment Board (CPPIB) is investing $500 million into a logistics real estate joint venture in India in the Canadian fund manager’s latest commitment to the subcontinent.
CPPIB is investing the funds as an initial commitment to create a joint venture with Indian logistics platform IndoSpace, to be named IndoSpace Core. The new JV aims to acquire and develop warehouse facilities in India to take advantage of growing consumption and the modernisation of the country’s retail sector, according to a joint statement from CPPIB and IndoSpace.
The deal provides CPPIB with a majority stake in the joint venture, with the assets to be managed by IndoSpace. The investment follows less than a month after the Canadian fund manager committed up to $246 million to a retail real estate platform in India, and just two months after its $242 million investment in logistics projects in southeast Asia.
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“The strong fundamentals underlying the Indian manufacturing and retail sectors and growth in e-commerce, combined with the low stock of high-quality modern industrial real estate in the country, make this a compelling investment opportunity for a long-term investor like CPPIB,” said Andrea Orlandi, Head of Real Estate Investments – Europe for CPPIB said. “This joint venture gives us immediate scale and access to a significant development pipeline in a rapidly growing sector.”
Under the terms of the agreement between CPPIB and its new Indian partners, the manager of C$298 billion ($218 billion) in Canadian public employee pensions will be supporting IndoSpace in acquiring 13 industrial and logistics parks totalling approximately 14 million square feet (1.3 million square metres) in industrial and logistics hubs including Chennai, Pune, Mumbai, Delhi and Bangalore.
The joint venture will acquire the assets from portfolios currently held by IndoSpace development funds, with the first nine facilities totalling approximately nine million square feet to be handed over at closing. The remaining four facilities are to be contributed within the coming two years, according to the statement.
Also included in the scope of the joint venture agreement is an option for IndoSpace Core to acquire additional industrial and logistics parks totalling approximately 11 million square feet, which are currently being developed by IndoSpace funds and are worth approximately $700 million, according to the statement.
“The combination of our expertise and a strong macro backdrop, including Make in India, the GST rollout and growth in e-commerce, will provide significant opportunities for this joint venture,” said Everstone Co-Founder and Managing Partner Sameer Sain. IndoSpace is a joint venture between India’s Everstone Capital and private equity investor Realterm,
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CPPIB’s warehouse investment follows just over one month after the pension fund manager announced a $246 million retail joint venture in India.
In the April retail deal, CPPIB joined with Indian developer Phoenix Mills to develop, own and operate retail assets across India, starting with a C$149 million ($110.9 million) commitment for a 30 percent stake in the local firm’s rapidly expanding India retail platform, Island Star Mall Developers.
Under the terms of that agreement, the Canadian fund manager could take up to a 49 percent stake in the joint venture by investing up to C$330 million ($246 million) in multiple tranches.
In March of this year CPPIB linked up with compatriot Ivanhoe Cambridge to invest in the Southeast Asia operations of logistics developer Logos, with CPPIB committing $242 million to a pair of joint ventures aimed at building warehouses in Singapore and Indonesia.
CPPIB’s India logistics bet follows an earlier investment in the sector by Warburg Pincus which in 2015 formed a $250 million warehouse joint venture with India’s Embassy Group.