Actis, a global investor in sustainable infrastructure, is planning to invest over $700 million or nearly Rs 5,500 crore to build and develop assets under its platform focused on providing real estate to tenants in the life sciences and related sectors in India.
The London-headquartered investment major is looking to grow its life sciences realty portfolio through its recent acquisition Rx Propellant and is also looking at inorganic growth through a few more buyouts.
“India’s life sciences sector holds huge potential for growth in the current decade, with a large talent pool at significantly competitive cost making it a compelling destination for global research & development (R&D) and manufacturing,” Ashish Singh, Partner and Head of India and SE Asia Real Estate at Actis, said
The platform, which leases real estate to research & development (R&D) labs and associated facilities of these companies, will be expanded to over 6 million sq ft from current 1 million sq ft over the next five years. The company is looking to grow further in Mumbai, Hyderabad and Bangalore where it already has a presence, and will also add properties in Pune and Ahmedabad.
“We are planning to expand our operations in the life sciences segment through a buy and build program targeting both greenfield and brownfield assets with an emphasis on sustainability,” Singh said.
He believes India is a clear beneficiary of realignment of manufacturing and supply chains as part of de-risking from China when it comes to the life sciences industry. Also, patents that currently account for the global market worth around $250 billion, are expiring between 2021 and 2026 and India is positioned as a major beneficiary of this unlocking of the market.
India has been attracting a lot of global R&D work in the life sciences sector in the backdrop of an abundant high quality talent pool, and cost savings of over 65% to global corporations, which outsource such work to India.
More outsourcing of this work is expected to push demand for life sciences related real estate, while no organized supply of realty is available for these corporations in India currently as most of it remains fragmented.
Rx Propellant, with existing momentum in the business, is looking to be a market leading life science focused real estate developer-operator in India with its long-term alliances in the Indian contract research organizations ecosystem.
The life sciences sector in India is already of global strategic importance, as demonstrated during the Covid-19 pandemic. It is poised for significant growth, owing to a confluence of a number of factors both local and global.
The Covid19 pandemic has accelerated deal activity and confirmed investor interest in life sciences and healthcare companies. Strong growth in demand for the life sciences sector coupled with the unavailability of core assets during the initial phase of development is likely to drive higher rental growth offering attractive returns to investors.
The World Economic Forum suggests that Covid19 is perhaps not the last pandemic and that better preparation is needed to fight future disease outbreaks. As a result, life sciences research funding could increase both to fight the current Covid19 pandemic, and to build a better infrastructure for the future.
Actis recently completed fundraising for Actis Asia Real Estate Fund 2. The $700 million total represents limited partnership fund and co-investment commitments, with additional co-investment opportunities expected to deliver up to $1 billion of investable capital during the life of the fund.
The fund will allocate capital to invest in real estate that enables the New Economy, focusing on Actis’ key geographies of China, Korea, India and South-East Asia, and Vietnam.
