Private equity major Blackstone Group is set to acquire Embassy Industrial Parks at an enterprise valuation of $700 million or Rs 5,250 crore from Warburg Pincus and Embassy Group in the largest ever logistics and warehousing deal in India, said two persons with direct knowledge of the development.
The transaction is also the first large private equity investment of 2021.
With this complete buyout transaction, Blackstone will become the country’s largest warehousing space landlord with over 40 million sq ft logistic parks in assets.
The private equity firm — already India’s largest office space landlord—is set to become the biggest retail assets owner too with the conclusion of its $1.5 billion deal with Prestige Group.
Embassy Industrial Parks–a 70-30 joint venture between Warburg Pincus and Embassy–has total 22 million sq ft assets, while Blackstone already has 18 million sq ft warehousing assets in its portfolio through its stake buys in Hiranandani Group and Allcargo Logistics’ warehousing assets.
“The transaction between Blackstone, Warburg Pincus and Embassy Group has been finalised with all the key contours and is expected to be announced in the next few days,” said one of the persons mentioned above.
Out of total 22 million sq ft assets of Embassy Industrial Parks, 3.5 million sq ft are built and leased to clients including Amazon, Mahindra Logistics, FirstCry, Myntra, Delhivery and Rhenus Logistics among others.
Embassy Industrial Parks has warehouses in Chakan in Pune, Sriperumbudur and Hosur in Tamil Nadu, Farrukhnagar and Bilaspur in Delhi-NCR, Kothur in Hyderabad—and owns land in Bangalore.
ET’s email query to Warburg Pincus remained unanswered until the time of going to press, while Blackstone and Embassy Group declined to comment for the story.
Following the implementation of the Goods & Services Tax (GST) and emergence of ecommerce, Indian logistics and warehousing sector is headed towards transformative growth.
The government’s decision to accord infrastructure status to the logistics industry is allowing developers access to low-cost funds for development.
Given the fundamental shifts across the industrial and logistics sector in the last couple of years, along with rising demand for quality space, more developers are likely to build compliant, large-sized spaces.
ET has reported earlier that after emerging as the owner of India’s largest office real estate portfolio, the US-based private equity major has now set its sights on the country’s burgeoning warehousing & logistics sector.
Being one of the largest owners of warehousing spaces globally, the group is moving swiftly to create a large portfolio in India and market watchers says that it is in advanced talks with developers to acquire and build warehousing assets here.
In India, the global asset manager has an alliance with Hiranandani Group to identify and build new warehousing assets apart from a 90% stake in Allcargo Logistics.
Logistics is one of the biggest asset classes for Blackstone globally with investment of over $55 billion in this segment and the firm owns more than 575 million sq ft of warehousing space.
In the past few years, Blackstone has emerged as the most aggressive institutional investor in India’s real estate sector with a market value of $50 billion worth assets making it one of the top 10 business groups in the country.
Real estate accounts for nearly $20 billion of this market value across its 40 investments.
It is the largest office owner in India with an office portfolio of 118 million sq ft portfolio across 45 assets in 6 cities.
Of this, around 15 million sq ft offices are under construction and 19 million sq ft is future development. It has launched the country’s first two Real Estate Investment Trusts (REITs)–Embassy Office Parks REIT and Mindspace REIT–that are also among Asia’s largest REITs in terms of area.