PE-backed ESR establishes India logistics JV with Allianz
Private equity-backed Asian logistics and fund management platform ESR has established a joint venture with Allianz Group’s real estate division that will invest around $1 billion – comprising equity and debt – in India.
They will focus on large-scale, institutional grade logistics and industrial facilities in Mumbai, Pune, Chennai, Delhi, Ahmedabad, Kolkata, Bangalore, and Hyderabad. Other cities will be addressed on an opportunistic basis. The joint venture will also look to acquire assets as well as develop new projects.
ESG was formed in 2016 through the merger of Singapore-based warehousing company Redwood Group Asia and Chinese counterpart e-Shang. It now has more than $13 billion in assets under management (AUM) across Asia and a gross floor area (GFA) of over 11 million square meters in projects owned or under development. This includes 7 million sq ft of developable GFA in tier-one cities in India.
Part of the impetus behind the China business was the need for modernized supply chains to support the rapid growth of e-commerce. The India agenda is much the same. E-commerce revenue in the country is expected to hit $120 billion in 2020, up from $39 billion last year, spurred by increasing internet and smart phone penetration, growing acceptance of online payments, and favorable demographics, ESR noted in a statement.
"India’s logistics sector is coming of age. The sector is benefitting from a lot of favorable trends, such as stellar consumption patterns, continued infrastructure spending, increasing transparency and the nationwide implementation of a uniform indirect tax system”, said Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate. "This is the second time we are collaborating with ESR in the Asia Pacific region. They have built a best-in-class team in India to take advantage of the favorable environment for logistics. The pipeline indicates a strong start to the program.”
Allianz Real Estate, which has EUR60 billion ($68 billion) in AUM globally, previously invested $100 million in Redwood Japan Logistics Fund II, a closed-end logistics fund managed by ESR.
ESR is said to be planning to go public next year, having received several investments in the last 24 months that were described as pre-IPO rounds. The most recent came in June when CITIC Securities committed an undisclosed sum. This followed a $300 million investment led by Warburg Pincus in early 2017, $330 million from Korea’s SK Group, and $306 million from Chinese e-commerce operator JD.com.
Warburg Pincus established E-Shang in 2011 in partnership with the management team. The private equity firm has also made several investments in India’s logistics space, backing Continental Warehousing – which subsequently went public – establishing a warehousing joint venture with Embassy Group, and investing $125 million in Stellar Value Chain Solutions.
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