International Finance Corporation plans to make a debt investment of up to Rs 550 crore ($75 million) in a warehousing fund of industrial real estate developer IndoSpace.
IFC will put the money in Indospace Logistics Parks III LP in the form of a senior secured loan, the World Bank’s private-sector investment arm said in a disclosure.
Indospace Logistics Parks III LP is a $580 million 2018 vintage fund for developing logistics and industrial parks across India. The fund invests in warehousing and industrial property assets through various special purpose vehicles.
Indospace, India’s largest developer of top-quality industrial parks and warehouses, was launched by private equity firm Everstone and US-based logistics space provider Realterm in 2007. It manages 35 industrial parks across India with a total area of 36 million square feet. It has 80 tenants across categories, its website shows.
A bulk of its parks are located in Tamil Nadu (11), Maharashtra (nine) and Haryana (six). Apart from these states, Indospace has a presence in Karnataka, Andhra Pradesh and Gujarat.
IFC is one of the most active private investors in India, and makes both direct debt and equity bets on companies. It also backs private equity and venture capital funds as a limited partner.
The World Bank arm said it will play a “countercyclical role” by providing long-term finance that will enable Indospace to continue investing in its business, even as it emerges from an economic slowdown exacerbated by the coronavirus pandemic. The loan will also help save “thousands of jobs” in construction and ancillary sectors, IFC said.
“IFC anticipates that the project will provide a significant positive step forward to the Indian warehousing and industrial property market, which is in its evolutionary phase and now going through a severe slowdown due to Covid-19,” IFC said.
“If the fund is successful in developing and offering its properties in time for companies to set up operations, it will help demonstrate a path of recovery for the sector, relying on private investment and demonstrate to other players to replicate the Company's modern, efficient, and lower cost characteristics,” it added.