Shapoorji, ADIA tie up for $1.2-billion fund to invest in logistics centres

In one of the biggest fundraising plans in the logistics space, the Shapoorji Pallonji group has partnered the Abu Dhabi Investment Authority (ADIA) to raise a $1.2-billion private equity fund that will invest in logistics centres in the country, said sources in the know. 

The partners will raise the fund in two tranches of $600 million each. “Shapoorji will put in $100 million and the ADIA $500 milion,” one of the sources said, adding the documentation for the fund would end soon and that Shapoorji was already looking for land parcels.

A spokesperson for the Shapoorji Pallonji group declined to comment on the matter. An email sent to the ADIA, Abu Dhabi’s sovereign fund, did not elicit any response.
 

Venkatesh Gopalakrishnan, chief executive of Shapoorji Pallonji Real Estate, will oversee the fund, but there will be a separate CEO for which the search is on, the sources said.

“Shapoorji is into construction and real estate. So it is a natural progression for them,” the source said. 

He added the SP group and the ADIA had already joined hands to buy commercial assets in the country. Shapoorji Pallonji Real Estate also partnered Actis, IFC and ADB for affordable housing projects.

Riding on reforms such as the goods and services tax (GST), which has made India one uniform market, and rising demand from e-commerce companies, many Indian and foreign companies have formed ventures to invest in logistics and warehousing facilities. According to estimates, over $4 billion has been committed by investors to invest in Indian logistics facilities in the next few years.

Last year, industrial real estate and warehousing developer IndoSpace, backed by the Everstone group, closed its third logistics fund at $1.2 billion. 

While Singapore’s Mapletree and UK’s CDC are new entrants into this space, LOGOS and Singapore’s Ascendas-Singbridge already have such ventures in the country. Canada’s CPPIB has signed a joint venture agreement with IndoSpace. Experts say considering the benefits of the GST and the Multi-Modal Logistic Park Policy, the sector has started moving from the unorganised to organised space at a fast pace.

“In the next few years, we will see fewer but larger warehouses. Money will continue to chase asset owners with good-quality, large, fully-automated and smart warehouses,” said Shobhit Agarwal, managing director, Anarock Capital.

Demand in the segment is also rising. The overall space take-up in the logistics and warehousing sector crossed the 24 million sq ft mark in calendar year 2018, registering an annual growth of more than 40 per cent, which is an all-time high, real estate consultancy CBRE said in a report.

The ADIA has been named the world's biggest real estate investor with assets exceeding $62 billion. The sovereign wealth fund topped a list of the world's top 10 property investors in a research note published by Indosuez Wealth Management. The report said real estate investments represented 7.5 per cent of the ADIA's total assets under management.