Private equity major Warburg Pincus and Bengaluru-based realty player Embassy Group have committed $250 million to develop industrial and build warehouses in India.

While Warburg Pincus will invest $175 million, Embassy Group will bring in the rest in the joint venture — Embassy Industrial Park.

The joint venture marks Warburg Pincus’ foray into India’s industrial and warehousing space and Embassy Group’s entry into a new vertical. The joint venture has identified Sanand near Ahmedabad, Hoskote near in Bengaluru, Sriperumbudur near Chennai, Panvell-Bhivandi in Mumbai, and Chakan near Pune for technology enabled warehouses.

The new venture will target e-commerce, FMCG, automobile ancillaries, aerospace and retail verticals.

Niten Malhan, Managing Director, Warburg Pincus India, said the GST roll out next year will provide a huge opportunity for companies wanting to set up warehousing facilities. He expects revenues to start flowing from the third year of operations.

Warburg Pincus stays invested in such verticals for five-seven years.

The market for modern industrial and warehousing spaces near key cities across India currently is around 40 million sq ft and is expected to reach 125 million sq ft over the next five years.

“With micro markets identified, we are looking at 50-200 acre development in each city. Chennai park will be ready first,” said Jitu Virwani, Chairman and Managing Director, Embassy Group.

“About 90 per cent of the investment will be for acquiring land and the rest for working capital. For construction, we will raise debt,” said Anshul Singhal, CEO, Embassy Industrial Park. Embassy has a similar tie up with Blackstone for office space.

Warburg Pincus plans to replicate its China success in India. “With a Chinese logistics developer, owner, operator e-Shang, we have created 40-45 million sq ft assets,” said Malhan.

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