CPPIB expands India realty bet with $1.2 bn IndoSpace JV

Canada Pension Plan Investment Board (CPPIB) plans to invest as much as $1.2 billion (Rs 7,700 crore) in a joint venture with Indian developer IndoSpace to acquire and develop logistics facilities in the country.

CPPIB, which has been active in India’s realty market in recent years, has initially committed about $500 million to the JV—IndoSpace Core– for a significant majority stake, the two companies said in a joint statement. IndoSpace unit IndoSpace Capital Asia will manage the new venture, it added.

VCCircle had first reported in October last year that CPPIB had emerged as the front-runner to buy the assets of IndoSpace.

IndoSpace is an industrial real estate-focused investment firm jointly owned by homegrown private equity investor Everstone Capital and Realterm Global. Realterm, which has presence across North America, Europe and India, manages about $2.5 billion across 300 properties. It wasn't immediately clear if any of the two would exit after CPPIB's investment.

As part of the deal, IndoSpace Core will acquire 13 industrial and logistics parks totalling about 14 million square feet from IndoSpace development funds.

The assets are prime properties located in the top industrial and logistics hubs in India, including Chennai, Pune, Mumbai, Delhi and Bangalore.

IndoSpace Core also has the option to acquire additional industrial and logistics parks totalling about 11 million square feet worth about $700 million. These parks are being developed by IndoSpace funds. The JV will also acquire stable assets from third parties across India.

“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, managing director, head of real estate Investments – Europe, CPPIB.

CPPIB’s India play

The Canadian fund, which has invested about $3 billion in India since 2010, has been ramping up its India play over the past couple of years.

Last month, the Toronto-headquartered fund formed a joint investment platform with Mumbai-based developer The Phoenix Mills Ltd to develop, own and operate retail-led mixed-use developments in India.

CPPIB opened its seventh global office, and only the second in Asia, in Mumbai last October. It has invested in firms including Kotak Mahindra Bank and L&T Infrastructure Development Projects, besides forming joint investment platforms with Piramal Enterprises and Shapoorji Pallonji Group.

In 2015, it joined a consortium to invest in multiplex operator PVR and later reinvested in the firm. Early last year, it increased its stake in Kotak Mahindra Bank.

Besides its direct investments in India, it also invests in third-party PE funds as a limited partner (LP). Its Indian LP portfolio includes investments in Multiples Alternate Asset Management and India Value Fund Advisors. Both these firms raised new sector-agnostic PE funds for India in the past 18 months.

Globally, CPPIB’s assets under management stood at $278.9 billion with investments across asset classes such as public equities, private equities, bonds, private debt, real estate, infrastructure, agriculture, resources and other areas. In 2015, its exposure to debt, infrastructure and real estate grew the fastest among all the private investment classes.

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