Morgan Stanley Real Estate Investing (MSREI), the private real estate investment arm of Morgan Stanley (NYSE: MS), has purchased a majority stake of KSH Infra Pvt. Ltd. for INR (Rupees) 3.5 billion or $49 million. (All values will be converted to U.S. dollars.) The investment represents Morgan Stanley’s first acquisition of a logistics enterprise.
KSH Infra is a subsidiary of the KSH Group, based in Pune, India. KSH Infra specializes in warehousing, logistics and infrastructure development. The company currently has over one million square feet of warehouse space at two logistics parks in Pune in use or under development.
Morgan Stanley will help KSH Infra build 1.1 million square feet of warehouse space in Pune according to The Economic Times. This will be the first part of KSH Infra’s plan to build an additional 4.5 million square feet in Pune and Mumbai by 2020. The acquisition will require KSH Infra to demerge from KSH’s Distripark segment. KSH Distripark also operates an internal container depot in Pune and third-party logistics services across India.
“The market is witnessing a rapid change as the sector is increasingly being dominated by organized players,” said Prateek Jhawar, head of infrastructure and real assets investment banking at Avendus Capital, exclusive financial advisor to KSH Group. “KSH, with its offering of a sizeable grade A industrial park, an experienced promoter group and a capable management team has emerged as a strong player in the warehousing space.”
Foreign investment in Pune’s logistics sector has increased by $2.3 billion over the past two years. Mingtiandi said that Singapore-based Global Logistic Properties and U.S.-based Warburg Pincus have also invested in the Indian logistics industry.
According to LiveMint, the Indian logistics industry is currently valued at $160 billion. The industry is expected to grow at an annual rate of 10.5 percent to $215 billion in 2022.