CPPIB strikes largest deal in logistics space

In the largest private equity deal in the warehousing and logistics space in the country in recent years, Canadian pension fund manager Canada Pension Plan Investment Board (CPPIB) is set to invest $700 million in Indospace, sources said.

Indospace is the developer/investor of logistics and industrial parks promoted by private equity firm Everstone and US-based Realterm. 

“The term sheets have been signed. Currently, documentation is on and expected to be completed shortly,” said the source. 

It’s a three-step deal wherein the investor has to buy the existing properties, fund the under-construction properties and commit funds in the $300-mn logistics to be floated, said the source. 

Indospace has 11 projects under development across five cities and a total target built-up area of 15 mn sq ft. Its website says it is the largest developer of industrial real estate in the country. 

Although Singaporean fund GIC and Temasek were in the race, the final bidding boiled down to CPPIB and Abu Dhabi Investment Authority, the source added. 
 

When contacted, a CPPIB spokesperson declined to comment. An Everstone spokesperson said there was no comment to add. 

CPPIB has floated logistics funds in China, South Korea and Japan among others. It has tied up with GLP to float a $2 billion logistics fund in Japan this year. Last year, it tied up Dutch fund APG for a $500-million fund for the Korean logistics sector.

Late last year, it said it was committing an additional $1 billion to logistics investments in China. The funds will be allocated to the Goodman China Logistics Partnership, set up in 2009, to focus on key markets such as the Shanghai and Beijing regions of China. Of late, CPPIB has been increasing its investment in Indian real estate and allied sectors. It has also emerged as the front runner to buy into the mall assets of Phoenix Mills in Bengaluru and other cities, beating the likes of GIC and others in the country.

It has a joint venture with Shapoorji Pallonji to invest in office assets and has bought an IT park in Chennai last year. It also has a joint venture with Piramal Fund Management to provide debt to developers. 

“Real Estate Investments has a global mandate to invest in commercial real estate through direct joint ventures with best-in-class operating partners. We are focused on building a diversified portfolio of high quality properties that deliver stable and growing cash flows over the long term,” CPPIB says on its website. 
 

CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments. Head-quartered in Toronto, it has offices in Hong Kong, London, Luxembourg, Mumbai, and New York. As on September 30, 2016, the CPP Fund has CAD 300.5 billion (around $220 billion). 

“They are pretty bullish on Indian real estate and focusing a lot on rent generating assets which are considered less risky and provide fixed income,” said a fund manager who asked not to be named. 

PE firms have bet big on logistics companies in India following the boom in e-commerce, consumer goods and retail sectors. Recently, US-based Warburg Pincus invested $125 million in Stellar Value Chain Solutions, a third-party logistics company founded and led by former Future Supply Chains CEO Anshuman Singh. 
 

Warbug Pincus also has a $250-million joint venture with Bengaluru-based Embassy group for industrial parks. 

Recently, it invested $75 million in Gurgaon-based logistics firm TrucksFirst Services, which operates logistics start-up Rivigo. 
 

In April, Singapore’s distressed assets fund management firm SSG Capital Management Group invested up to Rs 580 crore in Future Supply Chain Solutions.