Global PEs eye ESR India's warehousing portfolio in potential ₹3,500 crore deal

Mint

2 days ago

Mumbai: Global private equity firms Blackstone, Brookfield and Ascendas have placed binding bids to acquire the warehousing portfolio of ESR India as global investors consolidate their hold on the country's logistics infrastructure.
The deal, which is likely to value the business at ₹3,500 crore ($400-420 million), is in its final stages, three people with direct knowledge of the development said.
'The binding bids came in on Thursday night. The firm will now sign exclusivity and proceed with one of the bidders," one person said. Mint first reported the company's plan to sell its warehousing portfolio on April 11. Real estate advisory firm JLL is advising ESR.
Spokespersons for Blackstone, Brookfield and Ascendas declined to comment on the matter. ESR and JLL did not respond to Mint's requests for comment on Thursday evening.
ESR India, a joint venture between Hong Kong-based ESR Group and Germany's Allianz Real Estate, is a logistics and industrial real estate company with about 24 million square feet of warehousing assets, including those under-construction.
However, given the interest among investors in warehousing, the assets attracted suitors, the second person said. The company's parks are located in states including Maharashtra, Gujarat, Haryana, Punjab and Odisha.
This is ESR-Allianz's second attempt at selling a controlling stake in the company. In 2023, the company planned to sell about 90% of the stake and retain the remaining 10%. The deal didn't go through, although Blackstone Group came close to clinching it.
'This time, the firm is looking to exit fully and hence the heightened investor interest," the first person added.
Blackstone has been bulking up its warehousing portfolio. Earlier this year, it spent ₹1,700 crore to acquire LOGOS India's three warehousing parks in Luhari in Haryana and Chennai.
ESR entered into the partnership with Allianz in 2018 and had said they would invest $1 billion, including debt, to develop large-scale warehousing and industrial facilities in India.
Warehouse deals
Xander Investment Management is also looking to monetize its warehousing assets in the country. Private equity firms such as Alta Capital's logistics platform LogiCap, Horizon Industrial Parks, CapitaLand Ltd, Firstspace Realty-backed Ascendas Firstspace and Morgan Stanley Real Estate Investing had placed bids for the asset, Mint reported in June. While the transaction is still in progress, Alta Capital may be inching closer to concluding a deal.
Private equity investment in Indian real estate hit $4.2 billion in 2024, a 32% surge from the prior year, according to data from Knight Frank India, a real estate consultancy. Warehousing led the charge, accounting for 45% of these investments and surpassing the office sector, which had held the highest share of PE investments since 2017.
An estimated 50-55% of Grade A warehouse stock is backed by global investors such as US private equity firm Blackstone, Canada Pension Plan Investment Board, Singapore's sovereign wealth fund GIC, Singapore-based GLP, and Hong Kong-based ESR Group.
According to JLL, India's warehousing stock has reached 533.1 million sq. ft, with emerging tier II-III cities contributing about 100 million sq. ft – a fourfold increase since 2017 – as of 2024.
'This shift signifies a fundamental change in the country's logistics landscape, aligning with the hub-and-spoke model envisioned during the implementation of the Goods and Services Tax (GST)," JLL said. The centralized model helps to improve deliveries and reduce costs.
There was robust demand across both established and emerging markets last year, with a combined absorption of 60 million sq. ft across 20 warehousing markets in India.
The growth was driven primarily by the consumption boom, with 60% of online purchases now originating from tier II and III cities, it said.