MUMBAI: Canada Pension Plan Investment Board (CPPIB) and mall developer The Phoenix Mills have entered into a pact to set up a strategic investment platform for retail real estate properties in India. This is CPPIB’s maiden retail real estate venture in India. CPPIB will initially own 30% of the platform with an equity commitment of around Rs 724 crore. It plans to invest about Rs 1,600 crore through multiple tranches to eventually own up to 49% in the platform.
Island Star Mall Developers, a Phoenix Mills’ subsidiary that owns Phoenix Market-City Bangalore, will serve as the platform for this alliance. The proposed platform will develop, own and operate retail-led mixeduse developments across India.
Based on the committed investment value, pre-money enterprise value of Island Star Mall Developers is pegged at about Rs 2,200 for this investment. “We are delighted to partner with The Phoenix Mills Limited to launch our first retail real estate venture in India where we will focus on acquiring or developing highquality retail assets across India’s top cities,” said Andrea Orlandi, MD, Head of Real Estate Investments – Europe, CPPIB.
“We believe that India will be a leading source of global growth in the coming decades and there will continue to be attractive investment opportunities for CPPIB. We look forward to expanding our venture with Phoenix Mills, an experienced retail operator and well-aligned partner,” said Orlandi.
CPPIB, the giant pension fund that makes private-equity investment, recently opened an India office to look for direct opportunities in the country. It also has a joint venture platform with Shapoorji Pallonji to buy commercial assets across top cities in the country. As on December 31, 2016, the CPP Fund totalled $298.1billion. EThad first reported about the proposed transaction in September last year.
Island Star Mall Developers owns 1-million-sq-ft Phoenix MarketCity in Bangalore. Apart from this property, it also has additional development potential to expand the existing mixed-use development by 2 million sq ft. It posted revenue of Rs 160 crore and a net profit of Rs 37.1 crore during the financial year 2015-16.
“Under this platform, we will be able to develop 5-6 million sq ft gross leasable area. Over the next 5-6 years, our operating portfolio under this platform will be close to 4 million sq ft with another 2 million sq ft being under construction then,” Shishir Shrivastava, joint MD, The Phoenix Mills, told ET.
The platform will be open to all growth options including acquiring land parcels to develop greenfield malls, acquiring a brownfield projects and even an operational property. However, according to Shrivastava, these projects will have to satisfy its criterion — locations, size and quality of brands — of providing aleadership asset in that market.
The investment platform will scout for opportunities in markets such as Mumbai, Pune, Bangalore, Kolkata, Hyderabad, Allahabad, National Capital Region, Indore, Lucknow and Chennai.