Leading realty firm Embassy Group is in talks with Indospace and ESR to monetise its warehousing and industrial parks business at an enterprise value of Rs 1,700-2,000 crore, according to sources.
Bengaluru-based Embassy Group, which in 2015 formed a joint venture with private equity firm Warburg Pincus to buid industrial parks, is looking to monetise completed and under-construction assets of the JV. Property consultant Anarock is helping Embassy Group in this proposed deal. Embassy Industrial Parks, the JV firm, is developing warehousing projects at Chakan in Pune, Sriperumbudur and Hosur in Tamil Nadu; Farrukhnagar and Bilaspur in Delhi-NCR; and Kothur in Hyderabad.
The total portfolio of the JV is 15-16 million sq ft, of which 3-4 million sq ft is operational. Warburg Pincus has a 70 per cent stake, while Embassy Group has 30 per cent shareholding in the JV. Earlier, sources had said Embassy Group is evaluating various options to monetise Embassy Industrial Parks. It could be the outright sale of the company or some new fund might come in as a new investor.
The sources had said the enterprise value of the deal could be between Rs 1,700 crore and Rs 2,000 crore. The debt of the JV is around Rs 700 crore. Embassy Group spokesperson declined to comment. Anarock Chairman Anuj Puri also declined to comment, while reply from Indospace is still awaited.
Embassy Group has a lot of land bank to create similar large portfolio of warehousing and industrial parks. The Indian warehousing sector is growing rapidly on strong demand from third-party logistics and e-commerce sector, encourgaing many players to enter this space.
Apart from Embassy Group, Indospace, ESR, All Cargo Logistics, Mahindra group, and Hiranandani are major players in this segment. Welspun group has entered into this business, which is attracting a lot of institutional investment.
The supply and demand of warehousing and industrial space have been impacted due to the COVID-19 pandemic but experts said the effect is less compared with the housing and commercial segments of the real estate. Embassy Group, led by Jitu Virwani, is a major player in the Indian commercial real estate. The group, along with Blackstone, launched India's first Real Estate Investment Trust (REIT) last year to raise Rs 4,750 crore through a public issue. Last month, Embassy Group proposed to merge around 11 real estate projects comprising nearly 62 million sq ft area with Indiabulls Real Estate Ltd (IBREL) and take control of the merged entity. Embassy Group already has around 14 per cent stake in Mumbai-based IBREL, which is part of the Indiabulls group.