PE funds inject $1.1 bn into logistics and warehousing over two years
Southern cities of Bengaluru, Chennai and Hyderabad see maximum inflows, followed by Mumbai and Pune
The logistics and warehousing sectors saw private equity firms pump funds in excess of $1.1 billion between Q1FY17 and Q1FY19, as per a report by property consultancy firm Anarock.
"PE player interest in logistics and warehousing is currently driven by favourable government policies, strong economic fundamentals and growth in organized retail and e-commerce," it stated.
The southern cities of Bengaluru, Chennai and Hyderabad witnessed maximum investor interest, followed by Mumbai and Pune. The logistics sector in Bengaluru, Chennai and Pune alone saw massive jump-start of nearly $200 million from PE players in Q1FY19.
A rapid ramp-up of e-commerce activity has caused a rise in demand logistics and warehousing, in Tier I and II markets. Increasing use of technology will further boost this sector in India as it has globally, it added.
"There is immense opportunity backed by the growing demand from e-commerce businesses in the past two years, and these sectors are now more organised," Shobhit Agarwal, MD & CEO – ANAROCK Capital said.
"The shift is visible and various small Grade B and C warehouses have converted to large Grade A ones equipped with modern facilities. The transformation has attracted PE entities from US, Canada and Singapore to pump in funds into the sector," Agarwal added.
Among the major deals, IndoSpace - India’s leading developer of industrial real estate and warehousing facilities – saw maximum inflow in 2017 to the tune of $500 mn from Canada-based CPPIB, for projects across Bengaluru, Chennai, Pune, Mumbai and Delhi.