Bengaluru | Mumbai: Realty firm Embassy Group has initiated talks with logistics fund ESR to sell its warehousing and industrial business, Embassy Industrial Parks (EIP), for more than Rs 900 crore, three people with direct knowledge of the development said. EIP was in talks with IndoSpace to sell the portfolio prior to engaging with ESR. The deal, however, did not materialise. “ESR is currently conducting due diligence on the portfolio and the deal is expected to be concluded by the end of this year.
Embassy is looking to monetise the completed and underconstruction assets of the platform,” said one of the people. The deal will see Bengaluru-based Embassy Group exiting the warehousing business completely. In 2015, Embassy-Warburg Pincus jointly formed EIP, a $250 million logistics platform, to set up industrial parks.
The PE firm now owns 70% stake in EIP, while Embassy Group holds the rest. “The Embassy group wants to exit the warehousing business and focus on commercial and residential. The firm will use the money as growth equity,” said another person aware of the developments. Embassy Group did not comment on the deal. ESR did not respond to ET’s email seeking comment till press time Sunday. ESR, a leading Asia-Pacific logistics real estate platform, has $22 billion of assets under management. It is also backed by New York-based Warburg Pincus. EIP’s development is spread across eight cities with 10 million square feet of completed development and over 35 million sq ft of ongoing and planned development.
It is currently developing warehousing projects at Chakan in Pune, Hosur (TN) near Bengaluru, Farrukhnagar and Bilaspur in Delhi-NCR, Kothur in Hyderabad and Sriperumbudur in Tamil Nadu. Growing e-commerce demand, changing consumer consumption patterns and rapid adoption of omnichannel distribution models by companies in the backdrop of the Covid-19 pandemic have likely pushed demand for warehousing and logistics spaces across the country. India is expected to add 170 million sq ft of new warehousing supply across its top 8 cities by 2023, according to the latest warehousing market report by JLL India.