CapitaLand Investment Limited (CLI) has launched a business park development fund, CapitaLand India Growth Fund 2 (CIGF2), with a target fund size of S$525 million to invest in Grade A business parks in prime locations across gateway cities in India. CLI has secured S$263 million1 (INR 16.3 billion2) from a global institution for a 50% stake in the fund’s first closing.
CLI intends to maintain a sponsor stake of 20% in the fund, in line with its asset-light strategy to grow its funds under management (FUM) while keeping strong alignment with its investors and partners. Including CLI’s equity contribution for the 20% stake, total equity commitment for the first closing is S$368 million (INR 22.9 billion). This is expected to add approximately S$700 million to CLI’s FUM.
CIGF2 has acquired an equity stake of 70% in International Tech Park Chennai, Radial Road (ITPC-Radial Road) from CLI for S$95 million3 (INR 5.9 billion) as its seed asset. CLI will continue to manage the ITPC-Radial Road asset after its divestment. Located in the business hub of Chennai, the 2.6 million-square feet ITPC-Radial Road caters to the IT / IT-Enabled Services sector. It offers two blocks of Grade A office space, state-of-the-art infrastructure, and is well- connected with all modes of transport including the upcoming metro line. ITPC-Radial Road is being developed in two phases, with Phase 1 expected to be completed by 3Q 2023. The project is attracting active tenant interest and leasing pre-commitments.
Simon Treacy, CEO, Private Equity Real Estate, CLI, said: “As a global real estate investment manager with close to 30 years of experience in India, we are able to leverage our deep loca l 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.”
Sanjeev Dasgupta, CEO, CLI India, said: “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 tenants4. CLI’s divestment of ITPC-Radial Road to CIGF2 demonstrates our disciplined capital recycling as we further grow our FUM.”
