Embassy group looking to monetise warehousing business at enterprise value of upto Rs 2,000cr

Leading realty firm Embassy group is exploring various options to monetise its warehousing and industrial parks business at an enterprise value of Rs 1,700-2,000 crore, sources said.

Bengaluru-based Embassy group, which had in 2015 formed a joint venture with private equity firm Warburg Pincus to build industrial parks, is in talks with few potential buyers to monetise completed and under-construction assets of the JV.

Embassy Industrial Parks, the joint venture firm, is developing warehousing projects at Chakan in Pune, Sriperumbudur and Hosur in Tamil Nadu; Farrukhnagar and Bilaspur in Delhi NCR; and Kothur in Hyderabad. The total portfolio of the JV firm is around 15-16 million sq ft, of which 3-4 million sq ft is operational. Warburg Pincus has 70 per cent stake while Embassy group has 30 per cent shareholding in the JV.

According to sources, Embassy group is evaluating various options to monetise Embassy Industrial Parks. It could be the outright sale of the company or some new fund might come in as a new investor, they said. An Embassy group spokesperson declined to comment. Sources said the enterprise value of the deal could be between Rs 1,700 crore and Rs 2,000 crore.

The debt of the JV is around Rs 700 crore. Property consultant ANAROCK has been roped in to find a buyer for Embassy Industrial Parks, they added. Embassy group has lot of land bank to create similar large portfolio of warehousing and industrial parks.

Indian warehousing sector is growing rapidly on strong demand from third party logistics (3PL) and ecommerce sectors. Many real estate players have entered this space and are developing Grade A logistics parks across the country. Apart from Embassy group, Everstone-backed Indospace, ESR, All Cargo Logistics, Mahindra group, and Hiranandani are major players in this segment. Welspun group has entered into this business, which is attracting lot of institutional investment.

The supply and demand of warehousing and industrial space have been impacted due to COVID-19 but experts said the affect is least compared with the housing and commercial segments of the real estate. Embassy group, led by Jitu Virwani, is a major player in Indian commercial real estate.

The group, alongwith Blackstone, launched India's first Real Estate Investment Trust (REIT) last year to raise Rs 4,750 crore through public issue. Last month, Embassy Group had proposed to merge around 11 real estate projects comprising nearly 62 million sq ft area with Indiabulls Real Estate Ltd (IBREL) and take control of the merged entity. Embassy Group already has around 14 per cent stake in Mumbai-based IBREL, which is part of the Indiabulls group.

After this proposed merger plan gets concluded, Embassy Group will have a controlling stake and become promoter of the merged entity. The Embassy group also owns WeWork India, which is into coworking and flexible workspace domain. It has also entered into coliving business in a big way.