Welspun One Logistics Parks launches India’s first warehousing AIF

Welspun One Logistics Parks launches India’s first warehousing AIF for domestic investors with an initial fundraise of INR 300 crores; targets total investment of INR 1,900 crore over the next 3-4 years

Welspun One Logistics Parks (WOLP), a pan-India integrated fund, development and asset management platform backed by the USD 2.7 billion Welspun Group, recently 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 WOLP AIF is distinctive as, presently, the only opportunity for domestic investors to invest in this high growth sector is by investing directly in individual warehouses. Through this AIF, investors will be able to reap the benefits of the returns by owning units of a fund, instead of the whole asset itself.

Welspun One announced the launch of their maiden INR 500 crore fund earlier this year in January and within months of the statement, the AIF has achieved an upwards of INR 300 crores; including a significant commitment from the Welspun promoter family office of INR 75 crore. The fund has an initial tenure of 4 years and a hurdle rate of 15%.

The fund, managed by an in-house team of over 30 professionals with deep local and institutional expertise in investment, development and asset management; when fully raised along with associated bank financing, will enable Welspun One to develop over 300-acres of Grade-A warehousing assets worth INR 1,900 crore approximately.

Including its flagship 2.7 million square feet project in Bhiwandi which is currently underway; in total, the company expects to deliver a portfolio with an estimated leasable area of 7 to 8 million square feet over the next 3 to 4 years. The fund will be deployed to develop Grade-A assets in pre-identified high growth markets such as Mumbai, Pune, Bangalore, NCR, Chennai, Kolkata and Lucknow. These assets will further 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.  

Being the first mover in announcing a warehousing fund that focuses on domestic investors and achieving a strong first close of 60% of the target fund size, certainly puts Welspun One is a strong position in the battle for identifying high potential asset classes in the great Indian growth story. 

Welspun One’s investment strategy is focused on sourcing and developing feasible land parcels which suit institutional investors and get leased by valued occupiers; whilst maintaining high levels of compliance, safety and zero tolerance to regulatory lapses across the project lifecycle. 

Such a business model offers complete control over the entire lifecycle of the investment, right from land acquisition, leasing, development and divestment. Given that 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 aims to deliver at least a million square feet of space by the end of this year, followed by more than two million square feet annually.

Warehousing has been one of the few sectors to have demonstrated resilience and continued growth, despite the economic headwinds brought upon by the Covid-19 pandemic, evincing significant interest from blue-chip investors globally and in India. 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. 

Accelerated adoption of e-commerce, same day or next day delivery commitments fulfilled by third-party logistics companies, and the need to diversify supply chain backed by a favourable regulatory backdrop along with the announcements of the Union Budget 2021 are further expected to boost the infrastructure spend and in turn the overall demand for modern warehousing in the future.

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