CapitaLand Investment (CLI) 9CI has launched a business park development fund to invest in Grade A business parks in prime locations across gateway cities in India. This is the group’s second business park development fund in India since the $300 million Ascendas India Growth Programme which was closed and fully committed in 2015.
The fund, named CapitaLand India Growth Fund 2 (CIGF2), has a target fund size of $525 million. CLI has already secured $263 million from a global institution for a 50% stake in the fund’s first closing. The group says it intends to maintain a sponsor stake of 20% in the fund. This is in line with its asset-light strategy to grow its funds under management (FUM) while remaining aligned with its investors and partners.
Including CLI’s equity contribution for the 20% stake, the fund’s total equity commitment for the first closing is $368 million. It is expected to add around $700 million to its total FUM.
The new fund has acquired a 70% equity stake in International Tech Park Chennai, Radial Road (ITPC-Radial Road) from CLI for $95 million as its seed asset, although CLI will continue to manage the asset after its divestment.
The park, which caters to the IT/IT-enabled services sector, spans 2.6 million sq ft and has two blocks of Grade A office space and state-of-the-art infrastructure. It is also well-connected with all modes of transport including the upcoming metro line.
The park is being developed in two phases. Phase 1 is expected to be completed by the third quarter of 2023. According to CLI, the project is attracting active tenant interest and leasing pre-commitments.
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“As a global real estate investment manager with close to 30 years of experience in India, we are able to leverage our deep local expertise to provide investors with quality assets that generate attractive returns. India is one of the fastest-growing economies in the world, anchored by its strong macroeconomic fundamentals and rapid urbanisation. Besides business parks, we see opportunities to invest in new economy assets such as data centres, logistics and industrial properties in India through our private funds,” says Simon Treacy, CEO of CLI’s private equity real estate arm.
“India is a core market for CLI where our business parks enjoy high occupancy, fuelled by demand from multinational corporations and local companies from the IT / IT-Enabled Services industry. The office and business park sector has been the most established and resilient asset class in India, and it provides stable recurring income through long-term leases with large corporate tenants. CLI’s divestment of ITPC-Radial Road to CIGF2 demonstrates our disciplined capital recycling as we further grow our FUM,” says Sanjeev Dasgupta, CEO of CLI India.
Shares in CLI closed 2 cents lower or 0.61% down at $3.26 on Aug 8.
