Singapore’s CapitaLand aims to double its funds under management in India by 2028

Mumbai: Drawn by India’s fast-growing economy, Singapore-based CapitaLand Investment is looking to double its $5.7 billion in funds under management here in the next four years.

Growth will be driven by investments in data centers, renewable energy and private real estate lending, in addition to existing business, industrial, logistics and hotel parks, CapitaLand’s top executives told Mint in an interview.

While the fund is optimistic about India, concerns about taxes, capital repatriation and currency volatility continue to bother foreign investors, executives said.

When CapitaLand acquired Temasek’s Ascendas in 2019, the India business accounted for about 3.5% of the Singaporean investor’s total asset base. Today, that figure has grown to 7%. Investments in India are likely to exceed 10% of CapitaLand’s total funds under management by 2028, according to Andrew Lim, chief operating officer of the fund group.

The real estate investment manager also wants to tap into India’s booming local capital markets and is evaluating various options for that, said Sanjeev Dasgupta, chief executive officer of CapitaLand Investment India. One option would be to park its renewable energy assets in an infrastructure investment trust (InvIT) when they become operational, he said.

Ascendas pioneered the concept of business parks in India three decades ago with an IT park in Whitefield, Bengaluru, executives said. Even today, CapitaLand derives about 90% of value in India through these parks. However, it ceded its early lead to peers such as Blackstone and Brookfield that have emerged among the country’s largest landholders.

“When companies like Blackstone and Brookfield came, they brought big cheques. At that time, we (Ascendas) didn’t have big cheques. We were a developer and we were building from scratch,” said Manohar Khiatani, senior managing director at CapitaLand Investment.

Now, CapitaLand wants to close this gap with its peers through organic and inorganic growth opportunities, he said.

Brookfield no doubt has similar plans to double its bet on Indian real estate over the next five years with investments of $10 billion, according to media reports.

23.5 million square feet of real estate in India

CapitaLand has about 23.5 million square feet of land across 14 business and technology parks in India. According to Dasgupta, there is about 16 million square feet in the pipeline.

It also has around 9.1 million square feet of logistics and industrial parks, with another 14 million square feet in the pipeline, he said.

However, much of the growth over the next four years will come from the rapidly growing data center and renewable energy businesses, he said.

CapitaLand has four data centres under construction in India, in Navi Mumbai, Bengaluru, Hyderabad and Chennai, with a capacity of about 244 gigawatts. According to Dasgupta, the company is banking on winning business from hyperscalers, which would prefer its newer data centre architecture to existing infrastructure.

To complement these energy-hungry data centers, the company is considering entering the renewable energy sector. Following its core expertise of developing and operating an asset efficiently, the fund will operate its own assets rather than hiring outside experts, it said.

The investment firm is also interested in lending funds to property developers in India. Local regulations have made it difficult for banks to lend capital to developers for land purchases or for projects pending regulatory approval. Meanwhile, local bankruptcy laws have also improved, further strengthening the possibility of CapitaLand entering this business, according to Dasgupta.

While India remains an attractive destination for global capital investments, Lim said some concerns remain around high taxes, limitations on repatriating capital abroad and currency volatility.

“Investors want to know how to price India. That’s the question everyone is asking: ‘What is the realistic return requirement that we can place on India today?'” Lim said.