CPP Investments is an Anchor Investor in IndoSpace Logistics Parks IV
Mumbai, INDIA (January 30, 2023) – Canada Pension Plan Investment Board (CPP Investments) today announced an investment of US$205 million as an anchor investor in IndoSpace’s new real estate fund. IndoSpace is a leading real estate company in India. The investment marks the first close for IndoSpace Logistics Parks IV (ILP IV), the company’s fourth development vehicle, targeting US$600 million of total equity commitments.
This is the latest venture between CPP Investments and IndoSpace. The first joint venture, IndoSpace Core, was established in 2017 and now owns the largest portfolio of stabilized modern logistics assets in India. CPP Investments has also invested in ILP III. Following the investment in ILP IV, the partnership will exceed US$1 billion in assets.
ILP IV will add an additional 25-30 million square feet to the IndoSpace portfolio, furthering IndoSpace’s leading position in the Indian market. ILP IV will focus on India’s largest logistics real estate markets: Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune. The establishment of ILP IV follows on from the first three development funds, which have a combined total of 56 million square feet of modern logistics real estate in India.
Hari Krishna V, Managing Director, Head of Real Estate India, CPP Investments, said, “Over the past few years, we have made numerous investments in India’s industrial space, where we see strong demand as the manufacturing sector continues to grow and the e-commerce sector matures. We are pleased to be working with our longstanding partner IndoSpace to further capitalize on opportunities in this space and believe this investment will deliver strong risk adjusted returns for CPP contributors and beneficiaries.”
Brian Oravec, Managing Partner and CEO, IndoSpace Capital Asia, said, “We are excited to extend our successful partnership with CPP Investments. CPP Investments’ commitment to ILP IV is a testament to IndoSpace’s leadership in the industrial and logistics real estate space in India. ILP IV will allow us to continue to expand our unique national network to better serve our customers. Industrial and logistics infrastructure is a key enabler of economic growth. To meet India’s aim of becoming a US$5 trillion economy by 2025, IndoSpace is excited to continue to be one of India’s key infrastructure creators.”
About CPP Investments
Canada Pension Plan Investment Board (CPP InvestmentsTM) is a professional investment management organization that manages the Fund in the best interest of the 21 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. As per September 30, 2022, the Fund totalled C$529 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Facebook or Twitter.
IndoSpace (www.indospace.in) is the largest investor, developer, and operator of grade A industrial and logistics real estate in India. IndoSpace has the largest national network of 50 logistics parks with 56 million square feet delivered/under development across 10 cities. With India’s largest and most experienced industrial real estate team, IndoSpace continues to lead the development of key logistics infrastructure for India’s economic growth. For more information, visit www.indospace.in and follow us on LinkedIn, Twitter, and Facebook.
Have a look at Indospace's website here.
It's in English and what I like about it is they highlight some interesting case studies and client testimonials like this one from Sandip Patil, Plant Head at Amazon:
When you count Amazon as one of your happy clients, you know you're doing something right and are a leader in industrial and logistics properties in India.
I was also impressed reading this case study on how it took IndoSpace 470 days to build a Germany to India association with our Force MTU partnership:
Client: FORCE MTU
Force MTU Power Systems is a joint venture between Force Motors and Rolls-Royce Power Systems AG. The former is a homegrown Indian automotive brand, while the latter is a German company that designs and manufactures industrial engines and parts. Force MTU combines the expertise of both to produce top-of-the-line engines for multiple applications. Notably for the Series 1600 engines for power generation and rail underfloor applications.
Force MTU's Requirement
Force MTU wanted to relocate their manufacturing operations from Germany to India. They aimed for the Chakan MIDC area near Pune as it was and still is an in-demand hub for various industries. Force MTU needed the assistance of an experienced and reliable developer-partner to undertake and complete such a project on time and with high- quality standards. In short, they wanted a modern and advanced specification plug-and-play facility.
The IndoSpace Advantage
Force MTU conducted thorough research about the industrial real estate developers in and around the Chakan region. They sought information about those who had a proven track record of project delivery and technical capabilities. Post the assessment, IndoSpace was on board as Force MTU's preferred developer-partner. We acquired complete knowledge about Force MTU's requirements and suggested IndoSpace Industrial Park Chakan I Phase III as the new destination for their relocation to India.
Design, Technical, & Execution Expertise
Force MTU wanted their new manufacturing facility in Chakan to have a distinct process layout from its German plant. Following were the goals we jointly agreed upon for the intricate project:
- Product quality must adhere to the client’s international team of experts.
- IndoSpace must provide 24-hour service utility maintenance and stable operations.
- Availability of utilities and resources needed for the manufacturing unit must be secured, such as high-tension power connection, industrial water, sewer and storm line connection, internal bituminous road, vehicle parking, fire hydrant and sprinkler system, and security gate with CCTV.
- IndoSpace would allot a total chargeable area of 0.18 mn sq. ft to the project along with a construction timeline of 470 days.
- IndoSpace must achieve project delivery within the agreed timelines.
Customisation & Sustainability
IndoSpace implemented several green initiatives for Force MTU to ensure efficient, sustainable, and environment-friendly operations were undertaken. It included the following features:
- Pre-engineered building, optimised column spacing, and a mezzanine floor for increased utilisation of ground floor, including fit-outs
- Precast concrete walls up to 3.6 m high and metal panels up to the roof
- Manually operated rolling shutters and mechanically operated dock levellers
- LED/T5 fixtures for providing 150 lux illumination
- Clear height of 9.2 m
- 2T/MT 2, flat/super flat floors, and FM2-compliant design to support high cube racking
- Fire Hydrant System as per National Building Code (NBC) India, fire-fighting system (sprinkler system), gas-based fire suppression systems for server room, and fire detection system as per FM Global standards
- 2500 kVA three-phase power connection from Maharashtra State Electricity Board (MSEB), with complete electrification
- HVAC system for humidity control and dust-free ventilation, comfort HVAC system with 350 TR chiller installation, process HVAC system with 299 TR chiller, and one cooling tower with 1755kW capacity for hot test process
- Concrete truck apron, 16.5 m long (from the face of dock wall to edge of pavement)
- Rock wool insulation, energy-efficient lighting and skylights
- Other infrastructure set-up and construction include:
- 15 EOT (building) cranes of several capacities and a whole fuel management system with 20 kl diesel storage and 20 kl engine oil storage, along with its process distribution lines within the shop floor for diesel and engine oil
- Complete compressed air connection line with the compressor and its distribution system
- Complete passive infrastructure for IT/DATA/VOICE along with the process requirements
- Complete BMS system for all utilities
- Liner panel for the entire roof and wall with rock wool insulation for thermal and dust control
- Paint booth pit
IndoSpace completed a high-quality advanced-specification facility suiting client's global standards within 470 days. Force MTU could commence its operations within the stated time frame
What else? IndoSpace is a leader in ESG practices:
Advancing Sustainable SpacesWe’re on a mission to become India’s most extensive Industrial and Logistics Real Estate network, without compromising on sustainability. We follow sustainable processes and practices in every operation to reduce our impact on the environment.
From its introduction in 2007 to being an industry leader, IndoSpace has always been attentive and socially responsible in conducting its business. Environmental sustainability, social inclusion, and good governance form the basis of our business values. Our way of developing systems and outlining processes revolve around these values to reduce our impact on earth. We undertake effective resource management and build sustainable facilities to include Environmental, Social, and Governance (ESG) capabilities into our operating system. We map our carbon footprint to minimise the social impact of business. The land is an integral part of our industry. By including ESG policies and initiatives into our functions, we aim to pay back to our environment.
IndoSpace’s Concept towards Sustainability
IndoSpace is on a resource-conserving expansion journey. As market leaders, we aim to set an instance for every company in this business to imbibe the principles of environmental sustainability, social embodiment, and genuine governance. Initially, we had moved to ‘green’ warehousing and blended various environmental-friendly features into our facilities’ design, sourcing, construction, and management. We set a distinct benchmark in green financing in India on our recent closure of INR 10 billion (approximately USD 135 million) ‘green’ loan from HSBC. To make our facilities self-sufficient in energy, IndoSpace has decided to invest abundantly in renewables. All our new expansions and acquisitions will conform to the sustainability standards based on our extensive portfolio of EDGE- certified ‘green’ buildings. Our parks in Luhari are the first projects in India to be accredited with the prestigious IGBC Platinum Rating for the Logistics Parks Category.
Our vision of sustainable spaces is fueled by advancements in technology. We believe in customer centricity and come up with innovative ideas to serve their needs. Our planning, design and implementation activities are integrated with technological innovations to deliver the best product offerings. We have successfully implemented ‘smart sensors’ and e-bikes, use of customer-facing applications for facility management and crisis communication. All of this is possible using our unified technology platform comprising Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Cloud, Mobility, and Analytics. Through automation, we have achieved better turnaround time, intensified productivity, and compliance monitoring. IndoSpace is continually upgrading and embracing technology changes for enriching customer experience and assuring efficient operations.
IndoSpace was one of the few businesses that indulged early in green warehousing. Since then, we have been continuously integrating sustainable practices in our business operations. We utilize strategic locations, prepare more conforming building design and construction methods and make productive use of resources.
Social CapitalIndoSpace is working together with communities for greater self-reliance and unlocking their potential. As our network spreads across the nation, we wish to leave a lasting impact on the communities we touch.
Anyway, the more you read about IndoSpace, the more you understand why it has great clients like Amazon and why CPP Investments is the anchor investor in their new real estate fund.
The secular themes that drive logistics properties in the developed world -- population growth, rise in e-commerce, digitization of the economy -- are the same themes that will drive India's growth in logistics properties.
The big difference is India's digital transformation is growing exponentially and is still in the early innings.
In fact, as noted by Santhosh Viswanathan, Managing Director, and Vice President – Sales Marketing & Communications Group, Intel India in the Times of India, technology innovations will define India’s business landscape in 2023:
In today’s digital era, technology is continually evolving, offering radical new growth opportunities for businesses to innovate, re-invent, and open new vistas to create and contribute to humanity’s well-being. Covid-19 has created a complex, multifaceted technology landscape that has not only accelerated the demand for digital innovation but has also challenged advanced manufacturing facilities. India, over the years, has made incredible strides in technology and the digital economy. From the development of cutting-edge AI capabilities to adoption of digital payments, 5G to high-performance computing, India has proven itself to be one of the most innovative nations in the world. In fact, India’s current digital transformation (DX) adoption landscape has been rapidly evolving, with DX spending projected to scale to USD $23.6 billion in 2025 at a CAGR of 17 percent.
Moreover, with a paradigm shift in businesses’ long-term strategic digital and resilience goals, DX technology investments are also expected to further accelerate.
In 2023, we expect to see five major tech trends that will define India’s growth and resilience.
Embracing Digital Transformation
India's feverish pace of adopting technology into all matters has it poised on the very cusp of digital transformation. Over the last few years, we've seen many paper-bound processes get transformed into simpler, digital processes. The “India Stack” is a game changer and a unique advantage for us. UPI took India from a paper-currency driven market to one that's synonymous with digital payments. DigiLocker is a great example of how, through technology, citizens now no longer need to carry cards and papers, but are instead served by a singular app that can securely house all their government records such as driver's license, vaccination records, educational certificates and more. In-person meetings are moving towards video calls as more and more of the workforce continues to work from home. given this environment, Indian businesses are poised to make significant investments towards digital transformation and IT modernization. According to the latest report by IDC, more than 95 percent of the IT decision makers in India reported that their organization plans to spend more than what they spent in 2021 on digital transformation initiatives, with the spending in India expected to reach $85 Billion by 2026. Our customers are digital and in turn businesses need to be more digital to cater to them!
AI to drive the next wave of business growth
AI is no longer just a buzzword. By 2023, AI is expected to define commercial applications and internal business optimization tools across a multitude of industries. In point of fact, AI adoption is expected to add $500 billion to India’s GDP by 2025, and therefore, businesses would need to focus on scouting ways to optimize processes, enhance productivity, and bridge the existing skill gaps. Organizations will now need to realize how AI can be utilized to support informed decision-making about not just near-term decisions, but also their future business paths. AI has shown that it has the potential to solve many of the problems that exist in the world, but for businesses, it offers a key benefit; optimization. For example, as the manufacturing industry in India continues to expand, AI could offer key insights into managing supply, production methodology and even inventory management resulting in reduced operating costs. With a digital audience in country, we have so much data that is and will be created, that it makes for a massive AI opportunity ahead of us!
Digital Infrastructure will power the Economy
India also happens to enjoy some of the lowest mobile data rates in the world, allowing for the country to bring a huge chunk of the previously untapped population online. This collective, while enjoying some of the lowest data rates in the world, also happens to generate the second highest amounts of data in the world, unlocking India's massive data-center potential. For context, India has 20 percent of the world's internet users, but the country accounts for only 2 percent of the world's servers. Consider the Unified Payments Interface (UPI), which crossed 7.8 billion transactions in December of 2022, as per the data shared by the National Payments Corporation of India (NCPI). Clearly, technology has started to weave itself into the very fabric of the economic progress, so growing the country's server capacity is not only important, but imminent. Data center growth will play a critical role in India's goal to double its GDP and become a trillion-dollar digital economy.
Building a Hyperconnected and Intelligent World
The accelerating speed of digital disruption has forever changed the dynamics of business – creating new business models, revenue streams, and digital ecosystems in this digital world. In 2023, the emphasis on harnessing the power of the Internet of Things (IoT), 5G, and Edge Computing will continue to be felt strongly. IoT has the potential to radically alter how companies evaluate and think about operations, product development, and design physical space – all things that impact the bottom line. By 2023, it is projected that over 43 billion devices will be connected to the internet, and with digital twins on the horizon, digital replicas of real things will soon become commonplace.
5G will be a game-changer for India, and with its recent deployment, it is expected to build a market of 31 million 5G users by end of 2022. As per Ericsson, the 5G enabled digitalization is slated to become a $17 billion opportunity by 2030. Therefore, India will be in a strategic position to boost its digital economy, enable advanced infrastructure, reap benefits from enhanced access to education, and healthcare, and seamless processes to transform businesses. Lastly, edge computing will make up more than 50 percent of new enterprise IT infrastructures deployed by enterprises.
Smartphone and PCs will shape the Connected World
While smartphones continued their steady growth in India for the last decade, the pandemic showed us that the PC continued to be a critical tool for consumers and businesses. As everyone moved to a work from home model, demand of laptops, desktops and monitors skyrocketed proving that the PC still is a device of choice to be productive. The demand signals may be cyclic but the net trajectory of these devices being an integral part of our growth story is clear. The education sector has also embraced digital learning in a big way across the country, with the government launching multiple programs across all levels of academia to facilitate hybrid learning. Gaming continues to show strong growth across the board, with a forecasted CAGR of 29 percent to 1.19 billion dollars in FY 2025. While there may be some headwinds faced by smartphone and PC industry in the coming months, the associated industries such as software, entertainment, cloud, web3, education, and even AR/VR are seeing a large uptick in consumption, pointing towards a positive outlook for the future.
Advanced digital technologies are coming your way. Many of these trends are already making their way to the business realm, and these will not be just your standard upgrades that will bring forth new and unexpected ways of conducting business. As 2023 begins, businesses must navigate this changing landscape while scaling innovations, and gaining a better understanding of how technology will continue to accelerate digital transformation across industries, as we set out on what will be an exciting new era.
Now, I shared this commentary to give you a small glimpse at how India's digital transformation is proceeding across businesses and consumers and that means demand for high quality class A idustrial and logistics properties will soar over the next 25 years.
Yes, I am thinking long-term because India, China and other emerging markets will not escape the coming global recession but that doesn't mean they're going to stop growing, just that their growth will be slower.
CPP Investments is finding the right partners to deploy capital and benefit from India's growth across many industries and sectors.
This latest deal proves to me at least that when CPP Investments finds the right partner, they help them grow their business over the long run.
Below, creating and operating the finest and largest network of industrial and logistics real estate assets in India, IndoSpace brings to you state-of-the-art Grade-A warehousing spaces that add value to your business.
If you want to understand why India is fast becoming a global logistics ad manufacturing hub, watch this clip.
Also, earlier this week, Marko Papic, chief strategist at Clocktower Group, joins 'Squawk Box' to discuss the takeaways from accusations against Asia's richest person, Gautam Adani, and what it means for the Indian market.