Investcorp and Global Funds Place Their Bets on Indian Warehouses

Investcorp and Global Funds Place Their Bets on Indian Warehouses

Table of Content

In this article, we’ll look at the reasons behind the growing international interest in India’s warehousing sector, fueled by the nation’s thriving e-commerce industry and manufacturing ambitions.

Key Takeaways:

  • Investcorp increases investments in Indian warehouses
  • International firms, such as Panattoni Development, join the trend
  • Private equity investment in Indian warehousing rose 45% in 2022
  • India benefits from the China-plus-one strategy

Betting on India’s Warehousing Sector

Bahrain’s Investcorp and other global funds are significantly increasing their investments in Indian warehouses, anticipating robust demand for logistics.

Doubling Down on Warehousing Investments

Bahrain-based Investcorp plans to boost the warehouse share of its $350 million Indian real estate portfolio, according to Ritesh Vohra, the firm’s real estate head in the nation. 

Last year, Investcorp deployed $55 million to back Chennai-based developer NDR Warehousing, expanding NDR’s warehousing space from 9 million to 14 million square feet.

A Flood of International Capital

Investcorp is not alone in its interest in Indian warehousing. 

The sector is attracting a significant influx of global capital, driven by the government’s push to turn India into a manufacturing hub and the steady rise in online shopping on platforms like Walmart’s Flipkart and Amazon.com. 

For instance, US-based Panattoni Development plans to invest $200 million in four logistics parks in India.

India’s Manufacturing Ambitions

India’s growing logistics demand is partially due to the China-plus-one strategy, wherein companies worldwide diversify their supply chains away from China amid geopolitical concerns. 

This shift aligns with Prime Minister Narendra Modi’s ambitious plan to transform India into a manufacturing export hub for products ranging from mobile phones to defense equipment. 

Companies such as Apple Inc. and Samsung Electronics Co. have already increased production in the country.

E-commerce Boom Powers Logistics Demand

The rapid growth of e-commerce in India, one of the world’s fastest-growing markets, has also significantly contributed to the demand for logistics space. 

Companies are investing in warehouses to speed up delivery times and enhance customer satisfaction. 

For example, Blackstone Inc. is constructing a custom warehouse for Amazon in New Delhi.

Investment Challenges and Opportunities

Despite the potential, global investors face challenges in tapping into India’s burgeoning demand for logistics space.

International-quality warehousing is in short supply, and complex land laws can present legal hurdles. 

Private equity funds are not allowed to purchase land directly, necessitating the use of intermediaries to transfer development rights.

Nevertheless, Indian companies are heavily investing in logistics space. Beauty firm Nykaa emphasizes the importance of having warehouses within a 200- to 300-kilometer radius of its clients. 

Similarly, third-party logistics firm Shiprocket plans to double its warehousing space by the end of the year, highlighting the significant demand for space in the industry.

Conclusion: A Bright Future for Indian Warehousing

As global funds like Investcorp and Panattoni Development bet on India’s warehousing sector, the country’s manufacturing and e-commerce industries are poised for even more growth. 

Despite the challenges investors face, the potential for returns in this thriving market remains strong. 

As India continues to develop as a manufacturing hub and e-commerce powerhouse, the demand for warehousing and logistics space is only expected to increase.

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Written by

Alexander Sterling

Alexander Sterling

Alexander Sterling is a renowned financial writer with over 10 years in the finance sector. With a strong economics background, he simplifies complex financial topics for a wide audience. Alexander contributes to top financial platforms and is working on his first book to promote financial independence.

Reviewed By

Judith

Judith

Judith Harvey is a seasoned finance editor with over two decades of experience in the financial journalism industry. Her analytical skills and keen insight into market trends quickly made her a sought-after expert in financial reporting.