Pallonji Real Estate to set up $600m warehousing investment platform

Shapoorji Pallonji Real Estate plans to invest Rs600 crore on buying land parcels this year to build a pipeline of projects. Photo: Ramesh Pathania/Mint

Pallonji Real Estate is setting up a $600-million investment platform in partnership with a global sovereign fund to enter India’s growing warehousing space, a top company official said.

The Shapoorji Pallonji group firm, which builds luxury to mid-income homes across the country, plans to roll out the new business by April, chief executive officer Venkatesh Gopalkrishnan said in an interview. He declined to name the sovereign fund.

According to two people aware of the development, who spoke on condition of anonymity, the Mumbai-based developer is close to tying up with Abu Dhabi Investment Authority (ADIA) for the warehousing investment platform. The deal is likely to be closed within two to three months, they said.

An ADIA spokesperson declined to comment on the matter.

Out of the $600 million, which will be invested across 4-5 years, the platform will deploy around $150 million within the next two years, Gopalkrishnan said. The remaining investment will depend on the success and progress of the industry segment. The investment platform will construct, acquire or invest in warehousing assets.

“Over the last couple of years, leasing has been quite strong. One reason is because of the goods and services tax (GST), people are consolidating their requirement. Also, we have seen quite a bit of growth in the e-commerce industry, generating the need for more warehouses. We want to capitalize on that,” Gopalkrishnan said.

Shapoorji Pallonji Real Estate’s expansion into the warehousing space comes amid concerns over the group’s financial situation. In November, rating agency Icra had downgraded the long-term rating of Shapoorji Pallonji and Co., citing “lower-than-anticipated progress achieved by the company in terms of its deleveraging plans through equity infusion and asset monetisation”. The group is currently considering several options, including selling solar power plants and road assets, besides a stake in its water-purifier business, Eureka Forbes, to repay debt. The group is also locked in a legal battle with Tata Group over Cyrus Mistry’s ouster as chairman of Tata Sons.

Yet, the company’s move also coincides with the increased interest in warehousing from other large property developers. Several investment firms and property developers have been looking at either expanding or entering the warehousing and logistics park business in India to capitalize on the growing demand for such spaces led by e-commerce firms and the implementation of the GST two years ago.

It plans to buy land to build warehouses or acquire leased warehouses in Mumbai, Pune, Gurugram, Kolkata, Hyderabad and Chennai.

“We want to focus on major cities and grade-A warehouses and also on bespoke requirements of various companies. We would be buying land and developing them and, in some cases, we may also buy out leased warehouses,” Gopalkrishnan added.

Last month, global private equity firm Blackstone Group Inc. formed a joint venture with a Hiranandani Group firm to develop warehousing and logistics parks across the country, marking its entry into the sector.

According to property advisory firm Colliers International, investments into the Indian industrial and warehousing segment is likely to touch $7billion by 2021, as existing players expand their portfolio and new ones enter the market. Since 2017, the Indian industrial and warehousing sector has seen investments of around $3.6 billion.

This article was first published on livemint.com.

 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.