Singapore’s sovereign wealth fund GIC and Asia-pacific focused real estate services and investment company ESR Group have entered a strategic partnership to set up a $600 million or Rs 4,964 crore joint venture to acquire income-producing core industrial and logistics assets in India.
The sovereign fund will be holding 80% equity in the joint venture (Core JV), while the Hong Kong Stock Exchange-listed ESR will control 20% equity.
This joint venture is an extension of the existing partnership in India between the two, which was initiated in 2020.
With the new arrangement, the capital pool available to invest in development and core logistics and industrial opportunities across the country stand over $1 billion.
"Capital partner support has been key to the growth of ESR's new economy real estate platform. We are excited to work with GIC to capitalise on the strong growth in the logistics sector in India. This stems from our long and deep strategic relationship covering multiple geographies and funds,” said ESR Co-founders and Co-CEOs Jeffrey Shen and Stuart Gibson.
The new joint venture provides focused capital dedicated to enabling inorganic growth of the platform and will invest in stabilised operational assets in strategic locations across India’s tier 1 and tier 2 cities.
“India is at the cusp of a supply chain transformation supported by automation, digitisation, and favourable government policies. Class-A industrial and logistics developments offer a variety of features to enable increased operational efficiency, which is vital to this shift,” said Abhijit Malkani, CEO of ESR India.
According to Malkani, the Core JV platform will upgrade the assets as required, and add sustainability elements, to ensure the same standard and product quality to customers in line with its own developed products.
With an upsurge in the share of organised retail and e-commerce, supported by emerging sectors such as electric vehicles and semiconductors, the industrial and logistics asset class is expected to outperform other real estate and infrastructure asset classes in the medium term.
The warehousing and logistics segment of real estate, which has emerged as relatively immune to the shocks of Covid-19, is expected to gain further strength, and attract more investment in the next couple of years.
In India, a favourable regulatory environment, along with the government’s support through policy and reforms, has started to boost spending in infrastructure and in turn the overall demand for modern warehousing.
As the manager of Singapore’s foreign reserves, GIC takes a long-term, disciplined approach to investing and is uniquely positioned across a wide range of asset classes and active strategies globally. These include equities, fixed income, real estate, private equity, venture capital and infrastructure.
ESR India, part of the ESR Group, is a leading developer and manager of industrial and logistics real estate with assets under management of around $1.7 billion and over 18 million sq ft of gross floor area.
ESR is APAC’s largest real asset manager powered by the new economy and the third largest listed real estate investment manager globally. It is the largest sponsor and manager of Real Estate Investment Trust’s (REITs) in APAC with total assets under management (AUM) of $45 billion.
With over $140 billion in total assets under management (AUM), its fully integrated development and investment management platform spans across key APAC markets, including China, Japan, South Korea, Australia, Singapore, India, New Zealand, and Southeast Asia.