BLACKSTONE NEARS TOP SPOT IN INDIAN WAREHOUSING SPACE

Us-based private equity major Blackstone is closing in on Indospace, the country’s largest warehousing developer, in terms of having the largest warehousing space.

While Indospace has 43 million square feet, with acquisition of Embassy Industrial Parks from Warburg Pincus and Embassy Group, Blackstone will have 40 million square feet, which includes 18 million square feet of properties through its joint venture (JV) with Hiranandani and a 90 per cent stake in Allcargo’s warehousing vertical. Blackstone on Monday announced it was buying Embassy Industrial Parks for ~5,250 crore. The JV has 22 million square feet of warehousing projects. Of the portfolio, 4 million square feet is developed.

However, Indospace, a JV between GLP, Realterm, the CPPIB, and Everstone, is ahead of Blackstone in terms of developed space. About half its 43 million square feet is developed.

In comparison, Blackstone has 9 million square feet of developed space. While 2 million square feet in the 12 million square feet is yet to be developed in the JV with Hiranandani, 3 million square feet of the 6 million square feet is developed in the Allcargo vertical. Indospace plans to invest $300 million from its latest fund to build an additional 18 million square feet warehousing space in the country.

“Blackstone has acquired a warehousing company and it will expand the market,” said Rajesh Jaggi, vice-chairman (real estate) at Everstone group, the JV partner of Indospace. Blackstone declined to comment on the matter.

Logistics is one of Blackstone’s core investment themes globally. Since 2010, Blackstone has acquired more than 1.2 billion square feet of logistics.

“Indospace has a head start in the field of logistics and enjoyed many years as a near monopoly in the quality Grade A warehousing space. However, a large fund with deep pockets coming in with a view to challenging that status could pose a significant threat to that leadership position,” said Rituraj Verma, partner at Nisus Finance.

However, Nitin Gupta, managing director at Macquarie Capital, said there was enough potential in logistics for a few players to exit. “There are multiple growth drivers — e-commerce, manufacturing, and so on.” ESR, promoted by PE major Warburg Pincus and the company’s senior management, is getting aggressive in the Indian warehousing space. It is looking to develop one “plug and play” warehouse every quarter to tap the growing demand from e-commerce, pharma and other sectors. ESR is the largest warehousing company in the Asia-pacific in terms of the value of assets held.

ESR is developing 14 warehouses in tier I cities such as the National Capital Region, Mumbai, and Kolkata, and tier II cities such as Nagpur and Rajpura. The warehouses have an area of 6.65 million square feet. According to Colliers International, the sector has attracted an interest from multiple large institutional investors, with investment inflows of ~27,800 crore ($3.7 billion) since 2017.