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Welspun One Logistics Parks launches Rs 500 cr warehousing focused fund

Business Standard, Jan 19, 2021

Named Welspun One Logistics Parks Fund I” the fund is a SEBI-registered Category II AIF Topics

Welspun | Warehousing


Welspun One Logistics Parks, backed by the Welspun group, has launched a Rs 500 crore warehousing-focused alternate investment fund (AIF) for domestic investors.

Named Welspun One Logistics Parks Fund I” the fund is a SEBI-registered Category II AIF.

The fund has a target size of Rs 500 crore with a tenure of four years and a hurdle rate of 15 per cent. Welspun promoter family office has put in Rs 75 crore. The investment thesis of the fund is to acquire land parcels in high demand, pre-identified markets, and develop Grade-A warehousing parks which will be leased on a long-term basis to ‘AAA’ credit tenants from sectors such as e-commerce, FMCG, third-party logistics (3PLs), pharma and auto-ancillaries.

On completion, these assets would be divested to institutional investors including private equity, pension and sovereign funds, REITs, and so on to provide an exit and deliver the targeted returns to fund investors.

Speaking at the launch of the AIF, BK Goenka, chairman, Welspun Group said, “India’s logistics sector will continue to be the backbone of economic growth, and warehousing is a key component of this ecosystem. Presently, domestic investors can only invest in this high growth sector by investing directly in warehouses. Through this AIF, the investor can reap the benefits of the returns by owning units of a fund, instead of an asset.”

“Our business model of an integrated fund, development and asset management platform ensures that there is control over the entire lifecycle of the investment including land acquisition, leasing, development and divestment. Welspun One’s investment strategy is focused around identifying tenant requirements and constructing built-to-suit warehouses to de-risk the investment. The team has spent the last 12 months creating a strong deal pipeline, with visibility on the deployment of a significant portion of the fund corpus. This includes our under-construction flagship 110-acre park with a leasable area of approx. 3 million sq. ft. in Bhiwandi, Maharashtra, which is already significantly pre-leased. In total, we expect to be able to deliver a portfolio of 6-7 million sq. ft. of Grade-A warehousing space over the next 3-4 years," said Anshul Singhal, managing director, Welspun One Logistics Parks.

Sanctum Wealth Management and Edelweiss Wealth Management are on board as the key distributors of the AIF.

Shiv Gupta, CEO, Sanctum Wealth said, “High structural demand, low vacancies, and a shorter development period relative to other real estate asset classes, combined with attractive returns and stable long-term yields have made the warehousing sector’s risk-reward dynamics very favourable for investors looking to add higher-return assets to their portfolios.”

“One of the big shifts of this 2030 decade would be the growth that India shall witness in infrastructure especially in logistics across the country. Mainly due to favourable government policies, consolidation, e-commerce and largely the market getting organised. The total penetration of warehouses in India is less than 0.1 sq. ft. per capita and the sector is expected to grow in excess of 20% CAGR. Welspun One’s AIF is a first of its kind, launched to leverage the large opportunity in the sector, with an inherent strategy to mitigate due risks while giving stable long term returns to investors. We are happy to partner with them and believe that this is an opportunity for our customers to participate in the development of the Indian warehousing sector by investing in this fund,” said Nitin Jain, CEO, Edelweiss Wealth Management.