Global private equity giant Blackstone Group is all set to sign a deal next week to acquire Embassy Industrial Parks, two people told VCCircle.
Embassy Industrial Parks is a 70:30 joint venture between private equity firm Warburg Pincus and real estate developer Embassy Group. Back in 2015, the duo had set up the JV to build industrial and warehousing parks in the country.
“As part of the deal, Blackstone will get 10 million square feet – of which 3.5 million sq ft is operational while the rest will be developed,” one of the persons said.
The deal will take the India warehousing portfolio of Blackstone to roughly 40 million sq ft. “It will have 15 million sq ft of operational portfolio, 15 million sq ft under-construction and the rest to be developed,” the second person said.
Both the persons said that Blackstone is acquiring the company at an enterprise value of roughly Rs 1,850-1,900 crore ($246-252 million).
Embassy Group and Blackstone did not respond to queries till press time.
Blackstone, which shares a long-standing equation with Embassy Group, came to the negotiating table after conversations failed with ESR India and IndoSpace.
With the deal, Embassy Group will exit the warehousing sector. The transaction will also provide an exit to Warburg Pincus which, the sources said, is likely to make a 15-16 per cent internal rate of return.
Embassy Group has presence across residential, commercial and retail realty. It is also the co-owner of India’s first real estate investment trust – Embassy REIT -- and runs WeWork co-working spaces in India under a license agreement.
The deal adds heft to the warehousing portfolio of Blackstone. After making its mark in India’s commercial and retail real estate, it forayed into warehousing early last year by teaming up with Mumbai-based Hiranandani Group to forge a platform focused on the segment.
After that, Blackstone acquired a part of Allcargo Logistics’ warehousing business.
The New York-headquartered private equity firm has been slowly ramping up its industrial and warehousing portfolio in the country. It is doing so at a time when the sector has revved up after lockdowns forced everyone to shop online.