Bengaluru: Canada Pension Plan Investment Board (CPPIB) emerged as the top real estate investor in the January-June period this year, as overall private equity and debt investments in the sector touched $1,597 million.
Investors put in around $1,096 million in equity in real estate projects and $501 million in debt financing, totalling $1,597 million, according to data by News Corp. VCCEdge. Large equity transactions in shopping malls, information technology (IT) parks and special economic zones (SEZ) dominated investments, while residential projects mostly stuck to structured debt deals.
The Toronto-based Canadian pension fund will invest around $750 million across two large platform or partnership deals in retail and industrial real estate, occupying the top slot among realty investors.
CPPIB and Everstone Group’s industrial and logistics real estate development platform, IndoSpace, announced a joint venture (JV) named IndoSpace Core in May to acquire and develop modern logistics facilities in India. CPPIB has initially committed $500 million and will own a significant majority stake.
The pension fund also formed a strategic investment platform with The Phoenix Mills Ltd (PML) to develop, own and operate retail-led mixed-use developments across India. CPPIB said it will invest $250 million for a 30% stake initially, eventually owning up to 49%.
“CPPIB is a significant investor in India, with investments totalling approximately C$5.8 billion. We believe India will be a leading source of global growth in the coming decades and that there will continue to be attractive investment opportunities for CPPIB. Our long investment horizon aligns to the financing and capital needs of India’s economy, entrepreneurs and businesses. We will continue to seek investment opportunities in India that meet our investment criteria,” Suyi Kim, head of Asia-Pacific, CPPIB said in an email response. (1 C$: Rs49.98)
“We were attracted to the Indian industrial real estate sector because of the strong macroeconomic fundamentals underlying the manufacturing and retail sectors and continued growth in e-commerce, combined with the low stock of existing high-quality modern industrial facilities,” Suyi Kim added.
Other Canadian funds such as Brookfield Asset Management Inc. and Caisse de Dépôt et Placement du Québec (CDPQ) have stepped up investments in India, both in the realty space and outside.
Apart from Singapore’s sovereign wealth fund GIC Pte. Ltd and Blackstone Group Lp, the two top real estate investors in the country, Brookfield Asset Management has built a $2 billion asset base here in a span of seven years.
India’s real estate sector has witnessed a four-year-long slowdown that continues, resulting in tepid home sales, slow launches and a severe liquidity crunch impacting most developers.
While investments continue in the office space and the fast emerging warehousing and logistics space this year, residential developers have mainly raised debt to refinance existing loans.
Investment firm The Xander Group Inc. and Dutch pension fund asset manager APGAsset Management NV bought an IT SEZ in south Chennai for around $350 million. Xander also bought an IT park in Noida for around $45 million this year.
“We have been investing across asset classes and are looking at opportunities in warehousing, but on a deal to deal basis and continue to invest in commercial office. In residential projects, however, sales velocity is slow and balance sheets of some developers are stressed,” said Rohan Sikri, senior partner, Xander Investment Management Pte Ltd (the real estate private equity arm of The Xander Group).
“The strategy of many of the large pension funds appears to be to enter into different asset classes with credible partners, where one grows the business through these platforms. The focus is mostly on rent generating or stabilized assets, like shopping malls, offices or warehousing,” said Shashank Jain, partner, transaction services at PricewaterhouseCoopers India, a consultancy firm.