Blackstone Buys Embassy JV's Warehouse Biz for Rs.5000 Cr

Blackstone procures Embassy Industrial Parks, a joint venture between Embassy Group and private equity firm Warburg Pincus, for about $700 million (around Rs.5,000 crore) is set to be one of the largest deals in the country’s emerging warehousing sector.

With this deal Blackstone gets a foothold in the warehousing industry, which has seen substantial investments from PE players lately due to a boom in e-commerce and the need for online retailers to store and ship items immediately to customers.

The transaction is being done in two tranches. Initially, Blackstone is buying 10.6 million sqft for $400 million from Warburg. Secondly it is expected to be completed later this month — the remaining 11 million will be bought for $300 million, said a person aware of the matter.

“Logistics is one of the firm’s highest global conviction themes, anchored by our belief that e-commerce trends will further fuel demand for logistics space, especially near city centres. This is particularly true in India, where ecommerce is in its nascent stage,” says Asheesh Mohta, head of Blackstone’s Real Estate India Acquisitions.

The world’s largest PE firm procures 1.2 billion sqft of logistics space since 2010 globally. India’s e-commerce hub Bengaluru has just 30 million sqft of grade A and B warehouses, as compared to 1.2 billion sqft in Chicago, Mohta adds.

The deal signals the end of Embassy’s tryst with the warehousing industry, which it entered in 2015 with Warburg through a $250-million joint venture. Embassy Industrial Parks’ warehouses are situated in Bengaluru, Pune, Hyderabad and Delhi NCR.

“This transaction between Embassy Group and Blackstone further strengthens and reinforces our partnership. We are extremely focused on consolidating our resources towards the growth of our core businesses of office and residential development and management,” states Jitu Virwani, chairman and MD of Embassy.

Blackstone and Embassy are associates in commercial real estate projects. India’s warehousing industry gained impetus after the passage of the goods & services tax in 2017. Across top eight cities, the sector witnessed a threefold growth to 46 million sqft in 2019 from 14 million in 2017. It dipped to 41 million sqft last year due to Covid.