CPPIB, Phoenix Mills extend malls partnership, to invest Rs 800 crore more

Global investment major the Canada Pension Plan Investment Board and leading retail mall developer the Phoenix Mills have entered into an agreement to extend their commitment to the existing alliance and also to form a new joint venture to develop a 1-million-sq-ft regional retail centre in Kolkata’s Alipore locality.

Both the entities will be collectively investing up to Rs 800 crore into their current joint venture, Island Star Mall Developers. CPP Investments will commit to investing around Rs 560 crore in Mindstone Mall Developers in tranches, for an ultimate equity stake of 49%.

The investment commitments indicate global investors’ continued interest in Indian mall developments and confidence in rebounding retail consumption once the Covid19 pandemic is over.

Phoenix Mills and CPP Investments are also extending their commitments to their current joint venture, Island Star Mall Developers (ISMDPL). Both parties have agreed to invest collectively up to Rs 800 crore into ISMDPL.

“With this investment, CPP Investments’ equity commitment to multiple ventures with The Phoenix Mills amounts to over Rs 2,620 crore. India is one of the most important markets for us in the Asia Pacific and a critical part of our long-term strategy. Working alongside reputed development partners such as The Phoenix Mills allows us to expand our portfolio and enhances our ability to deliver solid long-term risk-adjusted returns to CPP contributors and beneficiaries,” said Hari Krishna, Managing Director, Real Estate – India, CPP Investments.

With the funds invested by CPP Investments and Phoenix Mills, Mindstone will develop a retail centre with a potential leasable area of around 1 million sq ft. The target completion date for the development is the second half of 2024.

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“We are pleased to grow our strategic relationship with CPP Investments to establish our footprint in Eastern India. This investment bears testament to the attractive long-term prospects of our robust business model of creating destination consumption hubs in key cities of India,” said Atul Ruia, Chairman at The Phoenix Mills. “With this asset, we are well on track to more than double our operational retail portfolio by 2024.”

According to him, the company remains focused on expanding its portfolio by investing in attractive markets and ensuring timely execution of the projects.

In December, Singapore’s sovereign wealth fund GIC had also entered into an agreement with India’s largest mall developer and operator and its subsidiaries to set up a strategic retail-led mixed-use properties development platform in the country.

In their joint venture ISMDPL, Phoenix Mills and CPP Investments will be investing Rs 800 crore in tranches as required, in the ratio of their respective shareholdings.

This joint venture was formed in 2017 to develop, own and operate retail-led, mixed-use developments across India. Phoenix Marketcity in Whitefield Bangalore served as the seed asset for the alliance. In addition to owning and operating Phoenix Marketcity, ISMDPL owns–and is currently developing–three retail-led, mixed-use developments at Pune’s Wakad area, Bangalore’s Hebbal locality and Indore.

Shishir Shrivastava, Managing Director at The Phoenix Mills, had told ET in August that the company is eyeing inorganic growth opportunities as the Covid19 pandemic and subsequent lockdowns have made the valuations of probable acquisitions attractive.

These acquisitions–both new or brownfield projects–are expected to be in the range of 7 lakh to 1.2 million sq ft each and will be driven by the company’s stated strategy to emerge as a dominant consumption centre in the market.

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In August, the company had raised Rs 1,100 crore through a Qualified Institutional Placement (QIP) taking its cash position to Rs 1,920 crore.

Currently, the company has a total of 7 million sq ft gross leasable area across 9 operational malls in 6 cities including Mumbai, Pune, Bengaluru and Chennai. Except for Chennai, all other malls of the company have started operations post lifting of lockdown by various state governments. In addition to this, around 5 million sq ft gross leasable area is under development that will take its portfolio to 12 million sq ft by 2023-24.



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