New Delhi, May 19 -- Warburg Pincus-backed ESR Group, an Asia-Pacific focussed real-asset owner and developer, is all set form a new joint venture in India with its Singapore-headquartered long-term investor and partner, two people close to the development told VCCircle.
ESR, which globally develops and manages assets focused on logistics real estate, data centres and energy infrastructure, has an industrial and logistics portfolio of roughly 25 million sq ft across 24 sites in 11 cities in India. Apart from the logistics portfolio, it also has a small presence in data centre in the country.
In its journey so far in the country, ESR has raised capital from Germany's Allianz Group and Singapore sovereign wealth fund GIC.
It is in the process of setting up yet another joint venture with GIC through the alternative investment fund (AIF) route. "GIC has been a long-term partner for the real estate major in India and globally. They are backing ESR India again through the AIF route and will be committing a significant amount of capital soon," one of the persons mentioned above said.
The second person said that GIC is likely to commit anywhere between $300 million and $350 million (around Rs 2,890-3,372 crore). "The capital will be routed through an AIF with a small amount of commitment from other LPs (limited partners) and sponsor commitment. It is largely a GIC-backed fund," he added.
Both the people cited above said that the upcoming fund will back development of projects under the platform. So far, GIC has struck two tie-ups with ESR - one vehicle to back built and operational assets and another vehicle to support construction and development of projects.
"The latest fund will also back development projects and will provide capital line-up for current and future projects of the company," the sources said. They added that the tie up is currently in documentation stage and final contours of the fund is being shaped.
Separate emails written to the spokespersons for GIC and ESR did not elicit any response till the time of filing this story.
Earlier India ventures
Back in 2018, ESR set up a $1 billion platform for India with Allianz with both the parties committing $225 million. The platform had a mandate to invest in logistics projects in key cities Mumbai, Pune, Chennai, Bengaluru, Hyderabad, Ahmedabad, Kolkata and Delhi-National Capital Region.
This platform is currently on the block and ESR is negotiating a deal with real estate investor Brookfield to sell it. As and when the deal happens, ESR will give away roughly 10 million sq ft, out of its 25 million sq ft, as part of the deal.
With GIC, it struck a deal in 2020 to create a capital pool of $750 million for developing projects, with GIC holding an 80% stake in the JV and ESR holding the remaining. Again, in 2022, GIC extended its support and formed a $600 million joint venture in a bid to acquire income-producing core industrial and logistics assets in India with 80:20 structure.
When the latest fundraise fructifies, it will mark the third collaboration between GIC and ESR for such a platform. GIC has been a long-term partner for ESR at global level and is a key limited partner in some of its flagship funds.
Apart from logistics, ESR also has a small presence in the country in the data centre segment. Recently, as reported by VCCircle, ESR is in final leg to sell phase 1 of its data centre Rabale MU1 Data Centre in Navi Mumbai. Asia-Pacific investor PAG is all set to lap up the first phase of the project.
ESR, through its fully integrated real asset fund management and development platform, has presence across Australia and New Zealand, Japan, South Korea, Greater China, Southeast Asia, and India, including a presence in Europe.
Published by HT Digital Content Services with permission from VC Circle.