Canadian Pension Plan Investment Board (CPPIB) has struck a platform deal with Mumbai-based public-listed developer The Phoenix Mills Ltd to develop, own and operate retail-led mixed-use developments in India.
CPPIB said in a statement that it will initially own 30% stake for an equity commitment of Rs 724 crore and will pump in Rs 1,600 crore across multiple tranches to own up to 49% in the strategic tie-up.
In August 2016, VCCircle had first reported that the CPPIB is looking at forging a tie-up with Phoenix Mills for retail properties.
The announcement comes days after Phoenix agreed to acquire up to 49% stake in Island Star Mall Developers Pvt Ltd, a subsidiary that owns Phoenix MarketCity Mall in Bangalore.
The pre-money value of Island Star City Mall, which will serve as the platform, stands at Rs 2,200 crore.
“We are delighted to partner with The Phoenix Mills Ltd to launch our first retail real estate venture in India. We will focus on acquiring or developing high quality retail assets across India’s top cities,” Andrea Orlandi, managing director, head of real estate investments – Europe, CPPIB, said in a statement.
According to the Canadian firm, the funds will be used for acquiring and developing both green-field assets on newly purchased land banks as well as existing operating retail assets that are expected to be transformed into highly successful malls.
Phoenix Mills will manage all developments and operational assets in the platform.
“This is a landmark transaction for Phoenix Mills and a first of its kind for India’s retail real estate industry. In CPPIB, we have found a like-minded strategic partner that brings significant experience and expertise in creating and managing retail assets across the globe. Jointly, we are committed to creating world class retail assets to provide an unparalleled shopping experience to consumers,” said Atul Ruia, joint managing director, The Phoenix Mills Ltd.
The retail segment of India real estate market has seen a lot of activity in recent times with investors betting big money. The biggest owner of commercial property in India – Blackstone – has been aggressively buying retail properties and has created a separate platform - Nexus Malls – for the segment.
Dutch pension fund APG had also bought three retail assets of Virtuous Retail, the retail development arm of The Xander Group, to create a platform.
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