CPPIB commits $500m to India logistics joint venture

CPPIB’s partner in the JV is IndoSpace, itself a joint venture between the Everstone Group and Canada-based Realterm Global that develops industrial and logistics properties. IndoSpace will manage the entity, with CPPIB holding a majority stake, according to a statement.

IndoSpace Core has committed to purchasing 13 logistics and industrial parks totaling about 14 million square feet, with the first nine facilities to be acquired at closing and the rest within 24 months. The entity also has the option to buy additional facilities with a total of 11 million sq ft currently being developed by IndoSpace, valued at around $700 million. In addition, it will purchase completed revenue-generating assets from third parties.

“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,” said Andrea Orlandi, managing director and head of real estate investments for Europe at CPPIB. “This joint venture gives us immediate scale and access to a significant development pipeline in a rapidly growing sector.”

India’s warehousing industry has attracted increasing interest from investors in recent years on the back of predictions that demand for space to grow at an average annual rate of 9% through 2019. Warburg Pincus has made two investments in the past year – a $125 million commitment to supply chain services start-up Stellar Value Chain Solutions and the bolt-on to Stellar of refrigerated trucking specialist Kelvin Cold Chain. The GP is also expected to make a partial exit in the IPO of Continental Warehousing.

CPPIB’s investment follows a pattern established in other markets of partnering with a local service provider to manage warehousing space while the pension plan provides capital.

In 2009 it launched a partnership with Goodman Group to manage projects in China, committing $300 million jointly and later re-upping with another $1.25 billion. Last year it partnered with Global Logistics Properties to invest JPY100 billion ($877 million) in Japanese logistics, and earlier this year it teamed up with Caisse de Depot et Placement du Quebec (CDPQ) and Australia-headquartered property company Logos to develop projects in Singapore and Indonesia.

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• Topics
• South Asia
• Support services
• Expansion
• Real estate
• India
• Canada Pension Plan Investment Board (CPPIB)
• Logistics
• Everstone Capital