GIC, ESR Cayman form $750-million joint venture to invest in logistics

Singapore’s sovereign wealth fund GIC and Hong Kong’s logistics developer ESR Cayman on Tuesday said they have formed a $750-million (around Rs 5,500 crore) joint venture (JV) to develop and acquire industrial and logistics assets in the country.

It will be an 80:20 partnership deal, focusing on Tier 1 and Tier 2 cities.

The JV will be seeded with a 2.2 million sq ft build-to-core asset, located in close proximity to the large consumption hubs of Mumbai and Thane in Maharashtra.

ESR was recently in news for being in the race to acquire Warburg Pincus-backed Embassy Industrial Parks, but the talks fell through due to differences over valuations.

In 2018, GIC had formed a JV with K Raheja Corp to build and acquire warehouses in the country, which did not make much headway. GIC has a JV with DLF for commercial properties and a tie-up with Brigade Enterprises.

Kishore Gotety, co-head (Asia ex-China) of real estate at GIC, said, “Continued e-commerce growth in India over the long term, reinforced by rising internet penetration, is expected to drive strong demand for industrial and logistics assets. This is further supported by the emphasis on infrastructure development, changing supply chains, and low vacancy levels. This JV is well-positioned to benefit from these tailwinds, bring institutional-grade assets into this market, and generate resilient returns.”

Banking on the growth of e-commerce and implementation of the goods and services tax regime, several investors such as Canada Pension Plan Investment Board (CPPIB), Warburg Pincus and Morgan Stanley have invested in warehousing ventures in the country.

CPPIB formed a JV with Everstone-backed Indospace with an investment of over $1 billion. Warburg set up a JV with Embassy Group and invested in Stellar Value Chains floated by Anshuman Singh, former chief executive officer (CEO) of Future Supply Chains.

“This strategic partnership provides us with immediate scale to capitalise on the early growth stages of India’s rapidly modernising industrial and logistics landscape and tap high-growth opportunities and further expand our portfolio,” said Abhijit Malkani and Jai Mirpuri, country heads, ESR India.

Jeffrey Shen and Stuart Gibson, co-founders and co-CEOs of ESR, said, “We have a strong conviction in the growth prospects of India’s logistics real estate. Our seasoned local management team, led by Malkani and Mirpuri, will continue to leverage our prime logistics assets, deep market expertise, unrivalled track record in fund management and asset management to reinforce ESR’s robust growth and leading position in the Indian market.”