Canada's pension fund to invest up to $1.2 bn in IndoSpace joint venture

The joint venture will focus on acquiring and developing modern logistics facilities in India

Canada Pension Plan Investment Board (CPPIB) on Monday announced an investment of up to $1.2 billion in a joint venture with IndoSpace, which is into development of industrial and logistics real estate.

The joint venture firm 'IndoSpace Core' will focus on acquiring and developing modern logistics facilities in India.

The deal is one of the largest in the Indian realty sector and the biggest in industrial and logistics real estate space in India.

"CPPIB has initially committed approximately $500 million to the joint venture and will own a significant majority stake. IndoSpace Capital Asia will manage the new entity," the two companies said in a joint statement.

Indospace is part of real estate platform of Everstone group, a leading private equity player.

The JV will acquire 13 industrial and logistics parks totalling about 14 million sq ft, from current IndoSpace development funds. The assets are located in the top industrial and logistics hubs in India, including Chennai, Pune, Mumbai, Delhi and Bengaluru.

Under the deal, IndoSpace Core also has the option to purchase additional industrial and logistics parks totalling about 11 million sq ft, currently being developed by IndoSpace funds and are worth about $700 million.

"The strong fundamentals underlying the Indian manufacturing and retail sectors and growth in e-commerce, combined with the low stock of high-quality modern industrial real estate in the country, make this a compelling investment opportunity for a long-term investor like CPPIB," said Andrea Orlandi, MD, Head of Real Estate Investments - Europe, CPPIB.

This joint venture would provide immediate scale and access to a significant development pipeline in a rapidly growing sector, he added.

IndoSpace Core would also acquire stabilised assets from third parties across the country.

Sameer Sain, Co-Founder and Managing Partner, Everstone Group, said, "The combination of our expertise and a strong macro backdrop, including Make in India, the GST rollout and growth in e-commerce, will provide significant opportunities for this joint venture."

Indospace is a joint venture between the Everstone Group and Realterm, which is also a private equity real estate operator with over 300 operating and development properties in North America, Europe and India.