Welspun One Logistics Parks launches India’s first warehousing AIF for domestic investors

Welspun One Logistics Parks, a pan-India integrated fund, development and asset management platform backed by the USD 2.7 billion Welspun Group, has announced the launch of its first Alternate Investment Fund (AIF) product 'Welspun One Logistics Parks Fund I'.

The fund, a SEBI-registered Category II AIF, is India’s first warehousing fund that provides domestic institutions, HNIs, family offices and NRIs, an opportunity to invest in the booming warehousing and industrial real estate sector in India. The sector, poised at an inflection point of growth, has exhibited significant interest from blue-chip investors globally and in India. Warehousing has been one of the few sectors to have demonstrated resilience and continued growth, despite the economic headwinds due to the Covid-19 pandemic.

The fund is managed by an in-house team of over 30 professionals with deep local and institutional expertise in investment, development and asset management. The fund has a target size of `500 crore with a tenure of 4 years and a hurdle rate of 15%. It has a significant commitment from the Welspun promoter family office of `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, etc. so as to provide an exit and deliver the targeted returns to the fund investors.

On 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.” Anshul Singhal, Managing Director, Welspun One Logistics Parks, said: “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.”

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.”

Commented Nitin Jain, CEO, Edelweiss Wealth Management, “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, which has been 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.”