The platform, backed by the $2.7 billion Welspun Group, will see Welspun promoter family office investing Rs 75 crore in this proposed fund. The fund will have a tenure of four years and a hurdle rate of 15 per cent.
It will invest in acquisition of land parcels in high demand, pre-identified markets, and develop grade-A warehousing parks. These parks will be leased on a long-term basis to ‘AAA’ credit tenants from sectors such as e-commerce, FMCG, third-party logistics (3PLs), pharma and auto-ancillaries.
“India’s logistics sector will continue to be the backbone of economic growth and warehousing is a key component of this ecosystem. Presently, domestic investors can only invest in this high growth sector by investing directly in warehouses. Through this AIF, the investor can reap the benefits of the returns by owning units of a fund, instead of an asset,” said BK Goenka, Chairman, Welspun Group.
On completion, these assets would be divested to institutional investors including private equity, pension and sovereign funds, REITs, etc. so as to provide an exit and deliver the targeted returns to the fund investors.
“Our business model of an integrated fund, development and asset management platform ensures that there is control over the entire lifecycle of the investment including land acquisition, leasing, development and divestment. Welspun One’s investment strategy is focused around identifying tenant requirements and constructing built-to-suit warehouses to de-risk the investment,” said Anshul Singhal, Managing Director, Welspun One Logistics Parks.
According to Singhal, the team has spent the last 12 months creating a robust deal pipeline, with visibility on the deployment of a significant portion of the fund corpus. This includes its under-construction flagship 110-acre park with a leasable area of around 3 million sq ft in Bhiwandi, near Mumbai, which is already significantly pre-leased. In total, he expects to be able to deliver a portfolio of 6-7 million sq. ft. of Grade-A warehousing space over the next 3-4 years.
The fund, a SEBI-registered Category II AIF, will provide domestic institutions, high networth individuals, family offices and non-resident Indians, an opportunity to invest in the burgeoning warehousing and industrial real estate sector in India.
The sector, poised at an inflection point of growth, has exhibited significant interest from blue-chip investors globally and in India. Warehousing has been one of the few sectors to have demonstrated resilience and continued growth, despite the economic headwinds due to the Covid-19 pandemic.