BENGALURU: Blackstone has bought Embassy Industrial Parks, a joint venture between Embassy Group and private equity firm Warburg Pincus, for about $700 million (around Rs 5,000 crore) in one of the largest deals in India’s emerging warehousing sector.
The deal gives Blackstone a foothold in the warehousing industry, which has seen substantial investments from PE players in recent times due to a boom in e-commerce and the need for online retailers to store and ship items immediately to customers.
The transaction is being done in two tranches. In the first, Blackstone is buying 10.6 million sqft for $400 million from Warburg. In the second — expected to be completed later this month — the remaining 11 million will be bought for $300 million, said a person familiar with the matter.
“Logistics is one of the firm’s highest global conviction themes, anchored by our belief that e-commerce trends will further fuel demand for logistics space, especially near city centres. This is particularly true in India, where ecommerce is in its nascent stage,” said Asheesh Mohta, head of Blackstone’s Real Estate India Acquisitions.
The world’s largest PE firm has bought 1.2 billion sqft of logistics space since 2010 globally. India’s e-commerce hub Bengaluru has only 30 million sqft of grade A and B warehouses, compared to 1.2 billion sqft in Chicago, Mohta added.
The deal signals the end of Embassy’s tryst with the warehousing industry, which it entered in 2015 with Warburg through a $250-million joint venture. Embassy Industrial Parks’ warehouses are located in Bengaluru, Pune, Hyderabad and Delhi NCR.
“This transaction between Embassy Group and Blackstone further strengthens and reinforces our partnership. We are extremely focused on consolidating our resources towards the growth of our core businesses of office and residential development and management,” said Jitu Virwani, chairman and MD of Embassy. Blackstone and Embassy are partners in commercial real estate projects.
India’s warehousing industry gained impetus after the passage of the goods & services tax in 2017. Across top eight cities, the sector witnessed a threefold growth to 46 million sqft in 2019 from 14 million in 2017. It dipped to 41 million sqft last year due to Covid.