Singapore-based real estate investment firm CapitaLand Investment Limited (CLI) has launched a business park development fund, CapitaLand India Growth Fund 2 (CIGF2), with a target fund size of SGD 525 million ($390.04 milion) to invest in Grade A business parks in prime locations across gateway cities in India.

CLI said in a statement on Thursday that it has secured SGD 263 million ($195.39 million) from a global institution for a 50 percent stake in the fund’s first closing.

It said the firm intends to maintain a sponsor stake of 20 percent in the fund, in line with its asset-light strategy to grow its funds under management (FUM) while keeping strong alignment with its investors and partners.

Including CLI’s equity contribution for the 20 percent stake, total equity commitment for the first closing is SGD 368 million ($273.4 million). This is expected to add approximately SGD 700 million ($520.06 million) to CLI’s FUM.

It is noted that CIGF2 has acquired an equity stake of 70 percent in International Tech Park Chennai, Radial Road (ITPC-Radial Road) from CLI for SGD 95 million ($70.58 million) as its seed asset.

CLI will continue to manage the ITPC-Radial Road asset after its divestment.

Located in the business hub of Chennai, the 2.6 million-square feet ITPC-Radial Road caters to the information technology (IT) / IT-enabled services sector.

It offers two blocks of Grade A office space, state-of-the-art infrastructure, and is well-connected with all modes of transport including the upcoming metro line.

ITPC-Radial Road is being developed in two phases, with Phase 1 expected to be completed by the third quarter of 2023.

According to the statement, the project is attracting active tenant interest and leasing pre-commitments.

“India is a core market for CLI where our business parks enjoy high occupancy, fuelled by demand from multinational corporations and local companies from the IT / IT-enabled services industry,” said Sanjeev Dasgupta, Chief Executive Officer of CapitaLand Investment India.

According to him, the office and business park sector has been the most established and resilient asset class in India, and it provides stable recurring income through long-term leases with large corporate tenants.

“CLI’s divestment of ITPC-Radial Road to CIGF2 demonstrates our disciplined capital recycling as we further grow our FUM,” he added.

ITPC-Radial Road is recognized by the Indian Green Building Council (IGBC) as the first business park in India to be net zero at design stage across the parameters of energy efficiency, water conservation and waste management.

Pre-certified by IGBC as a platinum project, ITPC-Radial Road is also targeting to achieve WELL Gold certification for the entire development.

This is a global rating system that recognizes buildings designed and built to enhance the health and well-being of their occupants.

It will implement an intelligent building management system, with added support of digital twin technology to improve the energy efficiency of the property through real-time data analysis and performance monitoring.

Offering a modern office environment with excellent floor efficiency, ITPC-Radial Road’s quality amenities include a food court, coworking space, medical center, crèche, health club, convenience stores, and open collaborative spaces that will feature public art, among others.

CIGF2 is CLI’s second business park development fund in India since the SGD 300 million ($222.88 million) Ascendas India Growth Program, which was closed and fully committed in 2015.

In addition, CLI has two logistics private funds in India, the Ascendas India Logistics Program and CapitaLand Logistics Fund II, with a fund size of SGD 400 million ($297.18 million) each.

According to the statement, CLI which has close to 30 years of experience in India, has a resilient and well-diversified portfolio with total assets under management of SGD 4 billion ($2.07 billion) in India.

The firm has over 20 IT and business parks, industrial, logistics, lodging and data center assets across seven cities in India – Bangalore, Chennai, Goa, Gurgaon, Hyderabad, Mumbai and Pune.

In Chennai, CLI’s portfolio includes another two business parks (International Tech Park Chennai, Taramani and CyberVale) and an industrial facility in Mahindra World City held under CapitaLand India Trust, as well as two logistics and warehouse facilities at Oragadam and Periyapalayam managed by Ascendas-Firstspace.

“India is one of the fastest growing economies in the world, anchored by its strong macroeconomic fundamentals and rapid urbanization,

“Besides business parks, we see opportunities to invest in new economy assets such as data centers, logistics and industrial properties in India through our private funds,” said Simon Treacy, Chief Executive Officer, Private Equity Real Estate.

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