Blackstone may soon become the country’s biggest warehouse owner through the purchase of a 22 million square foot (2 million square metre) logistics joint venture.
According to local news reports, Private equity major Blackstone is said to be offering $700 million( INR 5,250 crore) to purchase Embassy Industrial Parks, a logistics joint venture between its US rival Warburg Pincus and India’s Embassy Group, which joined hands with Blackstone to launch the Embassy Office Parks REIT in 2019.
The deal is said to be in the final stages and will be formally announced within days, sources said.
The transaction is also the first large private equity investment of 2021.
Established by Jitendra Virani’s Embassy Group and Warburg Pincus in 2015, Embassy Industrial Parks has been expanding its portfolio with India’s e-commerce market creating demand for warehouse space.
In 2019, the joint venture partners announced that Embassy Industrial Parks would invest another $300 million in developing new logistics and industrial facilities across India.
Last September, they announced a plan to commence work on a 1 million square foot second phase of a facility in Bilaspur, Gurgaon. Warburg Pincus had originally committed $175 million to the joint venture, with Embassy Group committing $75 million,as per news reports.
Nearly 16 percent of Embassy Industrial Parks’ portfolio is leased to e-commerce players including Amazon, fashion platform Myntra and infant care marketplace FirstCry, as well as third-party logistics providers such as Rhenus Logistics, Mahindra Logistics and Delhivery.
Should the deal be completed, it would be the single largest transaction ever of warehouse assets, with Blackstone stepping in after two of Asia’s largest logistics developers reportedly failed to reach an agreement to buy out Embassy Industrial Parks.
At the reported consideration, Blackstone would be paying the equivalent of $31.82 per square foot of space for the company.
A landmark deal
For Blackstone, the Embassy Industrial Parks acquisition would add to a growing portfolio of India warehouse assets.
Blackstone entered India’s warehouse market in December 2019 through an INR 25 billion (then $350 million) joint venture with Mumbai-based real estate developer Hiranandani Group. Blackstone took a 50 percent stake in that joint venture, stated local press accounts at the time.
The company then bought a $53.6 million slice of Mumbai-listed Allcargo Logistics in January of last year.
With this complete buyout transaction, Blackstone is deemed to become the country’s largest warehousing space landlord with over 40 million sq ft logistic parks in assets.