Singapore's GIC in talks to invest over $100 million in ESR's fund

Singaporean sovereign fund GIC is in the final round of talks with ESR, a logistics investor backed by Warburg Pincus, to invest in the latter’s second India-focused logistics fund. 

Though the exact investment is not known, GIC plans to put over $100 million (Rs 750 crore) in the fund, which has a targeted corpus of around $300 million (Rs 2,250 crore), said people in the know. 

When contacted, an ESR spokesperson said: “We’re not able to discuss questions further at this moment.” A mail sent to GIC did not elicit any response.

In the first platform, ESR partnered Allianz Real Estate for a $225-million joint venture that aimed to become a $-billion asset platform. The platform’s strategy was to develop properties and purchase developed or developing assets. It targeted Mumbai, Pune, Chennai, Bengaluru, NCR, Kolkata, and others. 

ESR recently bought a piece of land in Chennai for an industrial park.

This is the second JV for GIC in logistics. In 2018, it partnered with K Raheja Corp to acquire and build warehouses. About $300 million was earmarked initially for the platform.  ESR India had AUM of $500 million and 1.4 million sq mt of projects at the end of 2019. ESR has AUM of $22 billion across Asia Pacific.

ESR and GIC are coming together at a time when logistics firms, including Indospace and ESR, are in race to buy Warburg’s logistics JV Embassy Industrial Parks. Warburg owns 70 per cent in the JV, with Embassy group controlling the rest. 

With a total portfolio of 15 million sq ft, Embassy Industrial Parks is developing warehousing projects at Chakan in Pune, Hosur in Bengaluru, Farrukhnagar and Bilaspur in Delhi-NCR, Kothur in Hyderabad,and Sriperumbudur in Tamil Nadu.

Many logistics ventures were announced after reforms, such as GST being introduced and PE investors showing interest in them. 

According to Colliers International, the sector has attracted interest from multiple large institutional investors, with investment inflows of Rs 27,800 crore ($3.7 billion) since 2017. Between 2017 and the first half of 2020, the sector garnered a considerable 17 per cent share of the total PE investment.