Blackstone lines up logistics push, in talks with Hiranandanis for deal

MUMBAI: After emerging as the owner of India’s largest office real estate portfolio, US-based private equity major Blackstone Group 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 as it is holding advanced talks to acquire and build logistics assets here.
Blackstone is talking to Hiranandani Group to acquire 50% stake in the realty developer’s logistics venture that has over 12-million-sq-ft assets under construction in Pune and Chennai, said persons with direct knowledge of the development.

Following this acquisition, Blackstone will create a platform, or a joint entity with Hiranandani, to build, own and operate logistic parks across various cities with existing demand or the potential to emerge as large consumption centres.

Apart from Hiranandani, Blackstone is also in advanced talks with Allcargo Logistics to pick up around 70% stake in its 9 million sq ft warehousing portfolio. The New York-headquartered global investor will be investing over $150 million through both the transactions including $60 million for picking up stake in Hiranandani’s GreenBase and $90 million for majority stake in Allcargo Logistics.

Both the transactions, expected to be concluded in a few weeks, will provide Blackstone control of over 21 million sq ft of warehousing space, catapulting it to the position of the second largest logistics real estate owner in India right at the outset.

“It’s (warehousing) a big opportunity and going by the aggressive moves of Blackstone at the debut itself, it’s certain that the firm would like to scale it up. It can get as big as its office portfolio,” said one of the persons mentioned above.

Logistics is one of the biggest asset classes for Blackstone globally as it is the largest owner of warehousing spaces. It has so far invested over$50 billion in this segment and owns 565 million sq ft of warehousing space.

In India, Blackstone has so far committed over $6.6 billion across 35 transactions. It owns over 115 million sq ft office spaces and 5.5 million sq ft retail space in the country. However, this will be the first time the global investor will be infusing funds into logistic ventures.

Apart from these two acquisitions and setting up of separate platforms with both the partners -- Hiranandani and Allcargo – Blackstone would be keen on more inorganic opportunities through these platforms and on its own in more cities going forward.

Blackstone and Allcargo Logistics declined to comment for the story, while ET’s email query to Hiranandani Group remained unanswered until the time of going to press.

In December last year, Hiranandani Group started its new vertical to develop industrial and logistics parks across the country. Apart from its own land bank of more than 500 acres in different parts of the country reserved for this purpose, the company is looking to acquire new land parcels either directly or through partnership and joint venture model in strategic locations.

“The government’s Make-in-India programme and the introduction of unified tax structure in the form of GST (goods and services tax) has brought a structural shift to the small fragmented warehouse networks into consolidated space, along with large distribution chains and centralised hubs,” NiranjanHiranandani, managing director, Hiranandani Group, had said while announcing the new vertical.

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 low-cost funds for the development.

Given the fundamental shifts across the industrial and logistics sector in the past two years, coupled with increasing demand for quality space, developers are more likely to build compliant, large-sized spaces.

The implementation of the GST propelled India’s logistics and warehousing absorption to an all-time high of over 24 million sq ft in 2018, recording a growth rate of over 40% compared to 2017, showed data from CBRE South Asia that estimated the rising interest of prominent players is likely to result in the country’s warehousing stock to touch 500 million sq ft by 2030.