IFC to invest $75 mn in Indospace Logistics to develop industrial parks

The funding will provide Indospace with long-term finance against the backdrop of the Covid-19 pandemic to continue investing and developing select projects

International Finance Corporation (IFC), the investment arm of the World Bank, is planning to invest around $75 million (Rs 550 crore) in Indospace Logistics Parks III LP, a $580-million vintage fund for developing logistics and industrial parks across India.

The fund is managed by Indospace Capital Asia Pte Limited and its Indian affiliate Indospace Capital Advisors Private Ltd, together referred to as Indospace. It develops and operates warehousing and industrial property assets in India through various special purpose vehicles (SPVs). These SPVs are indirectly owned by Indospace Logistics Parks III LP, a Singapore-based limited partnership managed by Indospace Capital Asia Pte Limited (Indospace or the Fund Manager).

IFC’s investment woud be in the form of straight loans of up to $75 million (around Rs 550 crore) to various SPVs that owned and operated the industrial and warehousing properties, said IFC. 

The funding will provide Indospace with long-term finance in these times of the Covid-19 pandemic to continue investing and developing select projects envisaged under the fund over the next two years. IFC anticipates that its commitment will provide a significant positive step forward to the Indian warehousing and industrial property market, which is in its evolutionary phase and now going through a severe slowdown due to Covid-19.

If the fund is successful in developing and offering its properties in time for companies to set up operations, it will help demonstrate a path of recovery for the sector while relying on private investment. The project will contribute to the resilience of real sector markets by enabling business infrastructure that will ensure a continued supply of goods and services at affordable prices and limit disruptions along supply chains, thereby mitigating the effects of an economic downturn.

The fund is an existing portfolio client of IFC. In 2018, IFC had committed an equity of up to $25 million, not to exceed 20 per cent of total commitments, in IndoSpace Logistics Parks III, LP. The company's sponsors include PE funds Everstone, Realterm and GLP, an investment manager and business builder in logistics, real estate, infrastructure, finance and related technologies.

According to the company's website, Indospace has a portfolio of around 36 million square feet across 35 logistics and industrial parks, including developed parks and those under various stages of development across the country. The company claims to be the largest network of industrial and warehousing parks in India.