ESR looks to grow its India portfolio, defers partial exit plans

Asia Pacific-focused real asset manager ESR Group, which was previously looking for a partial exit and dilution of its logistics holdings in India, now plans to grow its portfolio and then look for an exit either through an infrastructure investment trust, sale to a private equity firm or a strategic investor, three sources said.

It owns and develops logistics assets in India that are held under ESR India and the Indian operations of LOGOS, Australian subsidiary of ARA Asset Management, which it acquired in 2022. It is also investing in data centres in India and is learnt to be setting up a 50-MW colocation centre in Rabale, Mumbai.

The ESR group, one of the largest real asset managers in APAC and the largest sponsor of REITs in the region, managed assets worth $156 billion at the end of December 2023, with a gross floor area of around 525 million square feet (msf).

According to ESR group’s 2023 annual report its assets under management in India were at $1.7 billion at the end of December with a gross floor area of just over 30 msf. Revenue from India rose 13.4 per cent on year to $12.4 million.

In order to float a decent sized REIT or as in this case an InvIT in India would require a sizeable portfolio of 35-40 msf and this is what it is aiming at, sources said. ESR did not reply to an email sent seeking clarification on its plans.

ESR India has logistics assets of 18 msf gross floor area, spread across 15 sites in nine cities, according to its website. LOGOS has around five projects in India and in January this year it along with Ivanhoe Cambridge announced acquiring 66 acres in Chakan near Pune, taking its total holding there to 143 acres. Around ₹1,100 crore will be invested in the industrial micro-hub. It has developments in Bengaluru, Chennai, and the National Capital Region.

Logistics warehouses and industrial parks have become big business in India with both global and domestic companies investing in the sector. Industrial and logistics leasing in India touched a record high in 2023 at close to 40 msf, driven by third party logistics firms which had a 45 per cent share.