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KSH Infra in talks with PE, sovereign funds to set up warehousing platform

KSH Infra in talks with PE, sovereign funds to set up warehousing platform

Warehousing and logistic parks developer KSH Infra is in advanced talks with global institutional investors, including private equity and sovereign funds, to set up a dedicated platform to develop warehouses across four major cities in India. The company is planning to develop over 10 million sq ft warehouses in Mumbai Metropolitan Region (MMR), Pune, National Capital Region and Bengaluru through this alliance over the next four-five years. “We are looking to build a pan-India warehousing portfolio of over 10 million sq ft with a strategic partner,” Rohit Hegde, managing director at KSH Infra, told ET. “We have identified four key locations in major consumption centres to begin with and some more cities will be covered in the next phase.”

KSH Infra already counts Hong Kong-based Pacific Century Group, Morgan Stanley and Singapore-based Mapletree Investment Holdings as its key partners. The new strategic investors will hold a majority stake in the platform, while KSH Infra will be the execution lead. The company is looking to raise around $125 million by the end of December to fund the proposed land acquisitions in four cities. Hegde confirmed that discussions with potential strategic investors are at an advanced stage but declined to disclose specific details of the investor and proposed alliance.

KSH Infra estimates the 10 million sq ft development will be financed through total investment of $325 million, including around $125 million for land acquisition. The execution and development is estimated to cost $200 million, a large part of which will be funded by project finance from banks and financial institutions. According to financing experts, investors are upbeat on warehousing and are working closely with developers to identify opportunities.

“Absorption in warehousing space is expected to continue at a pace of nearly 40 million sq ft per annum for at least next 10 years,” said Prateek Jhawar, head-infrastructure and real assets, investment banking at Avendus Capital. “This offers a huge opportunity for global financial and strategic investors to play an important role. Though most institutional investors want to play the sector but given the limited availability of ready assets, investors have to come early to invest at the development stage to have a position in the sector.”

Keen interest of global players and investors in this space is indicated by nearly $7 billion that various platforms have raised for the warehousing sector since 2015. In June, KSH itself entered into a forward sale agreement with Mapletree for over 700,000 sq ft logistics parks, out of the total 1.2 million sq ft under-development asset in Pune’s Chakan locality. Last year, KSH Group sold 1 million sq ft of park in Chakan and Talegaon to Morgan Stanley Real Estate Fund for over $45 million.

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