CAPITALAND Investment : 9CI 0% (CLI) announced on Thursday (Aug 10) that it has launched a new fund to invest in Grade A business parks in prime locations across gateway cities in India. 

The CapitaLand India Growth Fund 2 (CIGF2) has a target size of S$525 million. It is CLI’s second India-focused business park development fund since the S$300 million Ascendas India Growth Programme, which was closed and fully committed in 2015.

In its first closing, CIGF2 secured a total equity commitment of S$368 million, including S$263 million from a global institution for a 50 per cent stake, and the remainder from CLI for a sponsor stake of 20 per cent. 

The new fund is expected to add around S$700 million to CLI’s funds under management (FUM). 

As its seed asset, CIGF2 has acquired an equity stake of 70 per cent in International Tech Park Chennai, Radial Road (ITPC-Radial Road) from CLI for S$95 million. The property will continue to be managed by CLI after the acquisition. 

“CLI’s divestment of ITPC-Radial Road to CIGF2 demonstrates CLI’s disciplined capital recycling as we further grow our FUM,” said Sanjeev Dasgupta, chief executive officer of CLI India. CLI’s current portfolio includes over 20 IT and business parks, industrial, logistics, lodging and data-centre assets across seven cities in India, totalling S$4 billion in value. 

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The new fund was set up as CLI expects opportunities to further leverage its expertise in the India market. 

As explained by Simon Treacy, chief executive officer of Private Equity Real Estate, CLI: “India is one of the fastest-growing economies in the world, anchored by its strong macroeconomic fundamentals and rapid urbanisation. Besides business parks, we see opportunities to invest in new economy assets such as data centres, logistics and industrial properties in India through our private funds.”

“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,” added Dasgupta.

Shares of CLI were trading S$0.03 or 0.9 per cent lower at S$3.23 as at 9.25am on Thursday.