LOGOS taps into investor appetite for growth markets

The co-founders of the pan-Asia logistics specialist tell PERE why now was the right time to make a debut in India.

LOGOS Group, the pan-Asia logistics specialist, has garnered more than $1.6 billion in capital in the past weeks, with $800 million available for deployment in the firm’s debut India venture. Backed by Canadian giants Ivanhoe Cambridge and QuadReal Property Group, LOGOS India, a partnership between LOGOS Group and Indian real estate company Assetz Property Group, is focused on developing and owning modern logistics facilities in targeted cities across India. Trent Iliffe and John Marsh, joint managing directors at LOGOS, tell PERE what makes India an attractive proposition and why now was an opportune time to take the first step.

PERE: There has been a lot of investor interest in India in recent months. How did LOGOS India come about?

Trent Illiffe:
India’s a big country and over the years a lot of our customers, so our tenants and capital partners, have been saying can you come to India and help us here. We have always had it there as a potential place for us to expand. It was only when Assetz came to us and said would you come and partner with us in India that we got comfortable that we could actually deliver what we want to.

We started talking to Assetz in April last year, and have been talking to them for a long time. Demand was certainly there from our customers. It has nothing to do with anyone else, it was all to do with timing.

Marsh: huge demand for India logistics

PERE: And what is driving that investor demand?

A lot of groups were obviously in there prior to the global financial crisis and many people had challenges and I think that’s a reason it has taken people a bit longer to get back in to the market, because of the legacy issues.

Modi is delivering on his promises and that has been important to capital partners to give everybody the confidence to invest. It really is demand-led and it’s fair to say we get asked to go to other countries, and at the right time and when the opportunity is there we will do that. At the moment, it is the growth markets where the biggest risk is for the customers in terms of quality of the current offerings.

Illiffe: the right time to enter India

John Marsh:
Our expansion is driven by our customers and our capital partners and they are really concentrated on growth markets in the region. Growing populations, GDP growth and other economic growth to sustain the opportunity – India has all of that.

PERE: Having garnered initial investor support of $800 million, how big is the size of the opportunity in India?

The population is a big indicator of how big this will be for us as a business. The amount of demand we have from our customers is huge, and we haven’t gone too far in discussions with domestic groups yet, this is just from our platform partners across Asia.
Nothing will be the scale of China, but it will be the next biggest country in terms of square meters and demand. At the moment, the value is not quite there as rents are substantially cheaper than elsewhere across the region, but our view is that demand is there to change that. We think 3-5 years is the timeframe for us to get a critical mass.

PERE: What challenges does the India logistics market present to new entrants?

Having contractors that understand the correct design and procedures of institutional-grade, international-grade facilities, is a challenge for us. But we are in a place that we can enforce a lot of our standards and design from other countries into theirs. Our customers are wanting that and what we need to do is make sure that as we find the right land banks, we are then finding the right contractors that they are implementing the facilities that our customers want. On the other side, it gives us the chance to grow with our customers across multiple cities and multiple areas, which is something you can’t find across some of the areas we are operating in.