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CPPIB makes India debut with $250m JV

The $181 billion Canadian pension plan hopes to buy income-producing office properties in India’s metropolitan areas in partnership with local conglomerate Shapoorji Pallonji Group.

The Canada Pension Plan Investment Board (CPPIB) has made its first foray into the Indian real estate market with the formation of a $250 million office joint venture with domestic developer conglomerate Shapoorji Pallonji Group, according to a CPPIB statement.

CPPIB will be committing $200 million of equity initially for an 80 percent stake in the venture, with Shapoorji putting up the remainder. The venture will be managed locally by Shapoorji, and will target foreign direct investment-compliant office buildings in India’s major urban centers.

“India is a key growth market for CPPIB and, as a long-term investor, we believe there are attractive investment opportunities across various sectors,” Mark Wiseman, president and chief executive of CPPIB, said in the statement.

Although the venture will initially target “stabilized” properties that are substantially leased to prominent tenants, CPPIB and Shapoorji also indicated that they hope to attain some value-added returns from “active asset management”. 

“Shapoorji Pallonji has a… reputation in the market for sourcing, delivering and executing value-added strategies,” Shapoor Mistry, chairman of Shapoorji, added in the statement. “We intend to use our experience of over 148 years in the Indian real estate market for the long-term success of this platform.”

The Shapoorji JV team will be led by Rajesh Agarwal, the chief executive and managing director Shapoorji subsidiary Shapoorji Pallonji Investment Advisors. Agrawal’s previous investment experience includes positions at AIG Global Real Estate in India, private equity firm Reliance Capital, and India bank subsidiary ICICI Venture.

The investment in a long-term partnership by CPPIB is the latest in India by a large international institutional investor in the past two years and demonstrates further how such investors are creating positions for themselves with a view to benefiting as the market matures.

The most recent example is the Singaporean sovereign wealth fund GIC Private Limited, formerly the Government of Singapore Investment Corporation. GIC committed to a $600 million property development platform managed by Singaporean fund manager Ascendas last month. The Abu Dhabi Investment Authority also committed $200 million to a non-discretionary club vehicle to be managed by domestic fund manager Kotak Realty Fund, with the hopes of increasing its size to $400 million with commitments from other investors.

CPPIB manages C$192.8 billion (€134 billion; $181 billion) of assets overall. In Asia this year the institution has also invested in Hong Kong and Korea with a C$205 million logistics purchase and a $116 million development, respectively. It has also increased its commitments to its Japan and China joint ventures with GE Capital and Goodman.