Bengaluru: Altico Capital India Ltd, a real estate-focused non-banking financial company (NBFC), has entered the warehousing and logistics sector by investing ₹ 650 crore in Renaissance Group’s ongoing industrial and warehousing park project in Bhiwandi near Mumbai.
The debt funding to the Mayur Suchak-promoted company’s ongoing Renaissance Industrial Smart City is primarily for aggregation of land and construction finance, said Sanjay Grewal, Altico’s chief executive. The project has a development potential of 20 million sq. ft of warehousing and industrial space.
The investment includes ₹ 50 crore co-investment from Asia-focused investment firm and Altico’s founding shareholder Clearwater Capital Partners Llc (now called Fiera Capital after the latter acquired it earlier this year). Altico is also backed by Abu Dhabi Investment Council and Varde Partners Inc.
Industrial real estate is emerging as a go-to asset class for foreign investors, aided by the government’s Make in India initiative and the goods and services tax (GST).
The transaction is in line with Altico’s strategy to diversify beyond commercial office and residential real estate, into infrastructure, health, education and hospitality. This is to achieve the firm’s goal of doubling its loan book to $2 billion in the next 18 months.
“The (industrial and warehousing) sector is poised to witness a period of high growth over the next few years driven by the introduction of a common goods and services tax (GST) across India, increasing demand from e-commerce players, granting of infrastructure status to the sector by the government, among several reasons," said Grewal.
Renaissance Group’s Suchak didn’t respond to calls and text messages.
Grewal said the company is looking at 2-3 deals in the warehousing space, and plans to invest another ₹ 350 crore by March 2019.
“We are looking at the top 8-9 cities where we are already investing in real estate projects and most of the new logistics facilities are coming up in and around these cities. Post GST, bigger facilities would naturally come close to urbanization and consumption hubs," he said.
Altico recently elevated former head of HSBC India, Naina Lal Kidwai, who has been an independent director in it since 2016, as chairman.
In the last month or so, many NBFCs have lost significant market value on growing concerns around asset-liability mismatches and tightening liquidity in the short-term money market after serial defaults at Infrastructure Leasing & Financial Services Ltd became public.
Grewal said Altico is well-capitalized with adequate cash and liquidity, and most of its debt is long term. As the residential market normalizes, the firm should be able to reach its target of assets under management of ₹ 9,000 crore in FY19.
In the last few years, many large global institutional owners and operators of industrial parks like Sydney’s Logos Group, Ascendas Singbridge Group and e-Shang Redwood have either entered or accelerated investments in India’s warehousing sector. The sector has attracted investments of more than $1 billion in 2017.
Demand for warehousing space in the top eight cities in India is expected to grow to 671 million sq. ft by FY21, an increase of almost 30% from FY16 numbers.
GST has ushered in a new era in warehousing, and Grade A warehouses will require 74 million sq. ft of fresh space by 2021, it said in a report.