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Singapore-based CapitaLand Ltd has launched its second logistics fund of 2,250 crore in India as it aims to tap the soaring demand for warehousing.

CapitaLand India Logistics Fund II will invest in building logistics assets in warehousing and manufacturing hubs in six cities—Ahmedabad, Bengaluru, Chennai, Mumbai, National Capital Region (NCR) and Pune—as well as in emerging markets such as Coimbatore, Guwahati, Jaipur, Kolkata and Lucknow.

The new fund follows the deployment of its first logistics fund, the S$400 million Ascendas India Logistics Programme, which was launched in 2018 to develop six projects in Bengaluru, Chennai, NCR and Pune. The projects have a total development potential of 12 million sq. ft of space, two of which are operational with 2.8 million sq. ft of leased space.

The second fund will grow CapitaLand’s funds under management (FUM) to S$79.2 billion across over 20 private funds and six listed trusts.

Jonathan Yap, president, CapitaLand Financial, who oversees CapitaLand’s business in India, said, “The launch of CapitaLand’s second logistics fund in India is in line with the group’s strategy to expand our fund management business to generate recurring fee-related earnings (FRE) and grow the group’s assets under management (AUM) in a capital-efficient way."

In 2018, Singapore-based Ascendas-Singbridge Group and real estate firm Firstspace Realty entered India’s industrial logistics and warehousing market with their first fund. In 2019, CapitaLand completed the acquisition of Temasek Holdings-owned Ascendas-Singbridge.

Ascendas-Firstspace manages the assets of Ascendas India Logistics Programme and CapitaLand India Logistics Fund II.

“The second fund will significantly increase our geographical footprint. With the growing penetration of e-commerce, modernization of supply chain management and increased focus on manufacturing, we are well-positioned to tap the rising demand for high-quality logistics and industrial space in India," said Aloke Bhuniya, chief executive, Ascendas-Firstspace.

CapitaLand’s total logistics AUM is about S$3.9 billion.

Property advisory Knight Frank India on Tuesday projected that warehousing transactions for the top eight cities in India will grow at a compound annual growth rate of 19% to 76.2 million sq. ft by FY26 from 31.7 million sq. ft.

The e-commerce sector is expected to take up an estimated 98 million sq. ft, registering an increase of 165% from FY17-21. Third-party logistics and other sector companies are expected to take up 56% (83 million sq. ft) and 43% (53 million sq. ft) more space respectively, in the period.

“Our target is to grow CapitaLand’s FUM to at least S$100 billion by 2024. We will do so by raising new funds across geographies and asset classes, as well as supporting the growth of our existing Reits (real estate investment trusts), business trusts and private funds," Yap added.

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