Bengaluru based Embassy Group, a leading player in the real estate industry, is in talks with investors Indospace and ESR to monetize its warehousing business. The total value of the deal is estimated between Rs. 1,700, and Rs. 2,000 crores with debt being pegged at Rs.700 crore. ANAROCK, a Bengaluru-based property consultant, is advising the Embassy Group.
The prevailing Covid-19 pandemic has severely affected all sectors of industry and businesses, including real estate. The demand and supply of warehousing space have shrunk considerably, but experts believe that the housing and commercial segments are more severely impacted than warehousing space, which is soon expected to turn the corner.
The proposed Joint Venture has a ready land bank of 15 to 16 million sq ft, of which 3 to 4 million sq ft has already been developed and is operational. The Embassy Group has a 30 percent stake in the venture with Warburg Pincus having a 70 percent shareholding.
In 2015, Embassy Group had agreed to form a Joint Venture with Warburg Pincus, a top global private equity firm. The entity was named Embassy Industrial Parks. It marked the Embassy Group’s entry into the business segment of developing industrial and warehousing space in and around India’s main cities.
The JV has long been in the pipeline with the Embassy Group exploring various avenues to monetize Embassy Industrial Parks landholdings. Options before the Group ranged from outright sale of the company to bringing in funds from a new investor.
The project of Embassy Group could not have come at a better time. Leaving aside the temporary setback due to the Covid-19 effect, the Indian warehousing sector is on a roll. There is an exponential growth in demand from third-party logistics and the e-commerce sector, all of which require millions of sq ft of warehouse space.
This trend has motivated many players to enter the warehouse development space, and the Embassy Group is on top of the pile. What is working to the advantage of the Group is that they already have huge parcels of land in their portfolio. All that is required is the funds to develop the space, an objective that will be fulfilled with the latest JV with Indospace and ESR.
Embassy Industrial Parks is currently developing warehousing projects at Chakan in Pune, Sriperumbudur, and Hosur in Tamil Nadu, Farrukhnagar, and Bilaspur in Delhi-NCR, and Kothur in Hyderabad.