In order to cash in on India’s industrial growth, Kishore Biyani plans to invest $1 billion (approximately Rs 4,000 crore) to buy land and set up industrial warehouses across the country in the next three years. To begin with, his recently-listed firm Future Capital Holding (FCH) has formed an equal joint venture with Realterm Global, a part of North America’s leading air cargo distributor Aeroterm, which has 110 facilities managed and under development over seven million square feet across 30 markets globally.
The JV has raised $350 million through a private equity fund, and is in the process of mobilising another $500 million by way of debt. Future plans also include listing of the fund after three years.
The JV — Realterm FCH — has set up a four-member board with the foreign partner’s representative, Brian Oravec, as its CEO. Irfan Kazi, formerly associated with ICICI Venture Real Estate Fund, has been appointed as head of investment.
In addition to its dedicated team, the JV can leverage the expertise of FCH which manages three real estate funds — Kshitij, Indus and Horizon — with combined assets under management of $650 million. It has already set up offices in New Delhi and Mumbai.
FCH CEO & managing director Sameer Sain told ET that the opportunities in the country’s industrial real estate sector would be huge in the next few years. “The industrial real estate has so far been an overlooked, underdeveloped asset class. A significant focus has been given to high-profile residential, commercial and IT parks in the last five years.
We need 200 million square feet of industrial real estate space in the next five years which requires a combined investment of $8 billion. At the moment, we do not have a single modern industrial real estate in the country. FCH has the expertise in the real estate sector. Now we intend to extend it in the industrial real estate space.”
Realterm FCH has identified 1,000 acres of land and in the process of mapping out their possible links with metros and big cities. The target is to create an industrial warehousing facilities with over 22 million square feet of space in three years.
In addition to buying land and setting up its own industrial warehouses, Realterm FCH will also build and operate warehouses for the group’s flagship Pantaloon Retail. Although it’s going to be a small portion of its business, Realterm FCH may minimise the risk inherent in large-scale developments by signing Pantaloon as an anchor tenant.
According to Mr Sain, the private equity fund — Indospace Logistics Partners — have received commitment of investment worth $350 million. It is now working on the documentation for freezing the investments. Realterm FCH will also raise $400-600 million of debt to finance its expenditure.
Industry sources said the enhanced focus on infrastructure, increase in number of customers and growth of organised retail will fuel the growth in industrial real estate. The plan outlay for transportation infrastructure is pegged at $71 billion while 120 million customers are estimated to be added by 2010. Also, the organised retail sector is expected to grow to 10% of total retail from existing 3% in 2010. They, however, said the execution of large-scale industrial real estate projects in time without any cost over-run will be a challenge.
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