Warburg Pincus-Embassy in $250M JV for industrial parks

Global private equity firm Warburg Pincus has entered into a joint venture with real estate developer Embassy Group to build industrial parks and warehouses in the country, as per a press release.

The JV partners will jointly invest $250 million (Rs 1,627 crore) in the venture, christened Embassy Industrial Parks, to fund land acquisition and development across India.

The business will primarily operate on the lease-rental model in commercial projects. The industrial and warehousing spaces would be targeted at industry verticals such as third-party logistics, e-commerce, FMCG, automobile ancillaries and retail.

Jitu Virwani, chairman and managing director of Embassy Group, said the venture will allow the company to leverage the global experience of Warburg Pincus in industrial real estate. It will also allow the company to move into a segment that it expects to see grow tremendously, spurred by government policies, initiatives like 'Make in India' and the booming e-commerce industry.

Embassy Group has a separate JV with another PE giant Blackstone for office properties.

Anshul Singhal, who has been appointed as the CEO of Embassy Industrial Parks, said the venture is looking to build and lease 15-20 million sq ft over the next few years. “The immediate focus will be to ensure that we take up strategic land positions near the six key markets of Mumbai, Delhi, Bangalore, Chennai, Pune and Ahmedabad,” he said.

Viraj Sawhney, managing director at Warburg Pincus India, said the industrial and warehousing real estate sector in India has strong growth potential, as companies in e-commerce and other industries seek reliable developers who can meet their needs for quality warehousing infrastructure.

For the PE firm, which has assets under management of over $3.5 billion in India, this comes as the second back-to-back move in another segment of the real estate sector. The PE firm committed $284 million to Piramal Realty in July this year.

According to data provided by CBRE Indian Warehousing Market Analysis, the market for modern industrial and warehousing spaces is rapidly expanding and is estimated to reach 125 million sq ft over the next five years.

Another PE firm that has interest in the industrial park business is Everstone. It has a joint investment platform, IndoSpace Logistics Parks, along with American investment group Realterm Global.

IndoSpace raised $330 million for its second industrial real estate fund called IndoSpace Logistics Parks II in January 2014.

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