In the largest private equity deal in the logistics space, the Canadian pension fund manager Canada Pension Plan Investment Board (CPPIB) and IndoSpace, promoted by PE firm Everstone and US-based Realterm, have entered into a three-step deal which would entail an investment of $1.3 billion (Rs 8,320 crore), most of which will come from the CPPIB.
The two entities will set up a joint venture called IndoSpace Core to develop logistics facilities in the country. In the joint venture, the CPPIB will invest $500 million (Rs 3,200 crore) and get a majority stake.
As part of the deal, IndoSpace Core has the option to buy additional industrial and logistics parks, totalling 11 million square feet, currently being developed by IndoSpace and are worth about $700 million.
IndoSpace Fund III, floated by Indospace, would get an additional $100 million from the CPPIB as part of the new $650-million fund to develop more industrial and logistics parks in the country, sources said.
IndoSpace is a developer and investor of industrial and logistics parks. IndoSpace Capital Asia will manage the new entity.
As part of the deal, IndoSpace Core will buy 13 industrial and logistics parks with a space of 14 million square feet from the current IndoSpace development funds.
The joint venture will acquire the first nine facilities totalling around 9 million square feet and the additional facilities within 24 months.
The properties are based in Chennai, Pune, Mumbai, Delhi, and Bengaluru.
Andrea Orlandi, managing director and head of real estate investments (Europe), CPPIB, said, “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. This joint venture gives us immediate scale and access to a significant development pipeline in a rapidly growing sector.”
IndoSpace Core will also acquire stabilised assets from third parties across the country, both companies
said. Sameer Sain, co-founder and managing partner, Everstone Group, said, “As the leading owner and developer of logistics and industrial spaces in India, IndoSpace is excited to partner with CPPIB, one of the premier owners of industrial real estate globally. The combination of our expertise and a strong macro backdrop, including Make in India, the GST (goods and services tax) rollout and growth in e-commerce, will provide significant opportunities for this JV.”
The deal details
CPPIB to invest $500 mn for majority stake in a JV with IndoSpace
The JV, IndoSpace Core, has the option to buy additional logistics parks for $700 mn
Indospace to get an additional $100 mn from CPPIB as part of the new $650-million fund
IndoSpace Core will buy 13 industrial and logistics parks with a space of 14 million square feet, from current IndoSpace development funds
The joint venture will acquire the first nine facilities totalling around 9 million sq ft and the additional facilities within 24 months
Sources: Everstone, CPPIB