GIC has made India its prime focus of attention over the past two years and this week has seen the Singaporean sovereign wealth fund continue its thrust into India’s healthcare and real estate markets.
With AUM estimated at US$769 billion by Global SWF, GIC is on the verge of signing a deal to buy a majority stake in ESR India, worth US$400 million. ESR India is a logistics joint venture between the Hong Kong-listed ESR group and Allianz Real Estate. The JV was established in 2018 with a commitment to invest US$1 billion in industrial parks and warehouses. Allianz RE is believed to be looking to sell most, if not all, of its stake, while ESR is planning to divest a stake of 35-40%, according to The Hindu.
GIC is not a stranger to investing with ESR in India. Last November, it invested US$480 million for an 80% stake in a US$600 million platform with ESR taking the remaining 20%. The JV is focused on income-producing core industrial and logistics assets in India and represents an extension of the existing partnership in India between the two, which was initiated in 2020 with a commitment of US$750 million and the same 80:20 split. The partners are anticipating a surge in demand for logistics and industrial real estate, fuelled by India’s e-commerce growth and expanding industrial base. Elsewhere, the two have combined forces in Australia, with GIC is now the single-largest capital partner of ESR Australia, having participated in several ESR funds since 2020.
State-owned investors (SOIs) forge joint ventures in real estate to create large asset pools in partnership with a leading investor in the sector, who originates deals backed by the capital. This may be preferable in entering a market segment or region where a sovereign fund lacks in-house capacity and experience and where partners have a proven track-record of delivering superior yields. ESR is their favored partner in the Asian real estate market, particularly in the logistics segment where it has strengthened its leading position in the region’s logistics property market following last year’s acquisition of ARA Asset Management, including its subsidiary LOGOS.
Meanwhile, GIC’s joint venture with TPG, Asia Healthcare Holdings (AHH), is continuing to expand its Indian holdings, buying a major stake in India's Asian Institute of Nephrology and Urology (AINU) for INR6 billion (US$72.1 million). GIC began its involvement in AHH in early 2022, with a US$170 million investment; AHH was launched in 2016. AHH has entered the cancer, maternal and paediatric sectors. With a US$48 billion private healthcare market in a country with a population of more than 1.4 billion and an expanding middle-class, India possesses significant potential with growth rates consistently in double digit figures.
GIC’s investment in AHH was followed later in 2022 with the acquisition of a stake in the Max Healthcare Institute, alongside KKR and domestic institutional investors. The Singaporean state investor now has a 7.5% stake in the Delhi-based hospital chain, which operates 17 facilities, with more than 3,400 beds as well as homecare and pathology businesses.
From 2019, GIC has invested more than US$11 billion in the Indian economy (excluding public equities and fixed income), of which 41% is in infrastructure, 32% in private equity and 26% in real estate. So far this year, GIC has invested around US$2.7 billion in India’s private markets, up from an estimated US$1.6 billion for the whole of 2022. Its biggest investment so far this year has been its deal with Genus Power & Infrastructures to set up a US$2 billion metering platform with GIC staking a 74% share. The business is set to capitalize on the government’s National Smart Metering Project, under the Revamped Distribution Sector Scheme (RDSS), with a plan to install 250 million meters by 2025 with an expected investment of US$30 billion.