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Morgan Stanley, Allianz to enter Indian logistics

Business Standard:  December 21, 2017

Mumbai: Buoyed by changes such as the goods and services tax (GST) and the growing e-commerce space, global investors such as Morgan Stanley and German investor Allianz, are looking at getting into the Indian logistics sector, with new ventures, say sources.

Morgan Stanley, which had almost exited Indian real estate, is now looking at setting up warehouses and logistics centres on the outskirts of main cities, the sources said. “They (Morgan Stanley) will tie up with a local land owner or developer and invest in the project,” said one.

It has already bought a land parcel in Pune for $20 million (nearly Rs 130 crore) and the total investment could be around $100 million, sources said.

For the US-based investor, it is a comeback in real estate PE, after having put off a plan to float a $500-million India-focused property fund. When asked, Morgan Stanley did not offer any comment for this report.

Morgan Stanley had shifted all its Indian real estate investment to Proprium Capital, set up by former Morgan Stanley employees in 2013. Now, Proprium manages its investments in Bengaluru-based Mantri Realty and Pune-based Panchshil, among others.

Similarly, German insurer Allianz is looking to set up a joint venture (JV) in logistics with Indian groups, after having tied up with Shapoorji Pallonji to set up a $500-million fund to invest in office properties in the country, sources said.

“Allianz could also go with Shapoorji for a logistics venture but nothing has been finalised,” said the sources. When asked, a spokesperson for Allianz did not offer any comment for the report.

Already a number of global and domestic fund managers are betting highly on logistics and warehousing space in the country.

About half a dozen of fund managers or developers have raised or are in the process of raising about Rs 12,500 crore in all for the new funds and ventures in logistics and warehousing.

Recently, IndoSpace, promoted by PE firm Everstone and US-based Realterm, launched a $550-million third fund, IndoSpace III. Earlier this year, IndoSpace and Canada Pension Plan Investment Board (CPPIB) created IndoSpace Core, a JV to develop logistics centres. CPPIB also made a commitment of at least $1 billion (about Rs 6,400 crore) towards IndoSpace’s assets. 

In October, logistics company LOGOS India said it had raised $400 million in equity from Ivanhoé Cambridge, real estate subsidiary of Canada’s second largest fund manager, CDPQ, and Vancouver-based QuadReal Property Group to develop logistics facilities in this country. And, Singapore-based investor/developer Ascendas-Singbridge Group had formed a $600-million JV with Firstspace Realty to enter the industrial logistics and warehousing market.

Standard Chartered Private Equity is also in the final leg of talks with an Indian company to set up industrial and warehousing facilities in this country. The venture could have a corpus of $300 million (about Rs 1,900 crore).

“Rental income in warehousing is growing and the margins in logistics are improving due to GST. Further, both warehousing and logistics see huge business from e-commerce, fast moving consumer goods and consumer businesses .These have led to added interest in these sectors, compared to real estate which has high competition and lower sales for multiple reasons. In fact, many more players will enter this space,” said Ajay Jain, joint managing director at Sun Capital Advisory.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.