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Actis, Mahindra Lifespaces ink joint venture for industrial, logistics realty across India

Actis, leading global investor in sustainable infrastructure and the real estate and infrastructure development arm of the Mahindra Group, Mahindra Lifespace Developers have entered into an agreement to set up a joint platform for developing industrial and logistics real estate facilities across India.

The total investment in the business over the initial years, including debt, is estimated to be Rs 2,200 crore. Actis will own a majority stake, and Mahindra Lifespaces will have a significant minority stake.

“The warehousing sector in India is in early stages of a transformation, rapidly gaining scale while also undergoing modernisation. As experienced builders and operators of sustainable new economy real estate, Actis sees enormous growth potential in the sector as India grows to become the third largest consumption economy globally by the turn of this decade,” said Ashish Singh, Partner and Head of India and SE Asia Real Estate, Actis.

According to him, the demand for industrial real estate is on the rise as India benefits from a renewal of domestic capital investment cycle, realignment of global supply chains in many sectors and as the government’s production-linked incentive (PLI) schemes catalyse more investment in manufacturing locally.

For the proposed platform, the developer has earmarked around 100 acres of land with ready infrastructure in two Mahindra World Cities in Jaipur and Chennai, offering a built-up potential of over 2 million sq ft. These sites will be offered to the platform for acquisition and development.

“We are witnessing strong and accelerating demand for Grade A warehousing and manufacturing facilities from both multinational and Indian clients. With our experience in building and operating thriving integrated cities and industrial parks and our ready-to-market plug-and-play infrastructure in Mahindra World Cities in Chennai and Jaipur, we are well-positioned to cater to this demand,” said Arvind Subramanian, Managing Director and CEO, Mahindra Lifespaces.

The joint venture will also simultaneously acquire and develop other greenfield and brownfield sites in key markets across India, aiming to become a leading real estate solutions provider to global and local corporations. Over the next five years, the platform is aiming to build a portfolio with a size of 5-7 million sq ft and is looking to grow this much bigger after that.

The platform will be structured to accommodate several holding companies for the assets and an operating company that will take care of operations of these assets. Mahindra Lifespaces’ stake in each of these property companies will vary from 26% to 40%, while the majority stake will be held by Actis.

Industrial and warehousing have emerged as a high-growth real estate asset class buoyed by rising consumer demand and accelerating manufacturing investment. The National Logistics Policy announced recently by the government is expected to give a further fillip to investments in the sector.

Indian warehousing has been attracting interest from institutional investors, with more than $5 billion of funds being committed by private equity firms and pension funds such as CPPIB, Warburg Pincus and Ivanhoe Cambridge over the past five years.

The warehousing and logistics segment of real estate, which has emerged as relatively immune to the shocks of Covid-19, is expected to gain further strength and attract more investment in the next couple of years.

In India, a favourable regulatory environment, along with the government’s support through policy and reforms, has started to boost spending in infrastructure and in turn the overall demand for modern warehousing.

The warehousing sector is expected to record the highest ever absorption of warehousing this year due to the aggressive expansion of e-commerce and the growth of third-party logistics (3PL) companies.

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