Singapore sovereign wealth fund GIC and public-listed developer The Phoenix Mills Limited have entered into a strategic partnership to establish an investment platform for retail‐led mixed‐use assets in India. As part of the partnership, GIC will acquire a significant minority stake in a portfolio of projects worth $733 million.
The stated mandate of the platform is to develop, own, and operate retail‐led, mixed‐use projects in India. These projects are located in the prime consumption centres of Mumbai and Pune, the companies said in a statement. The assets, including a 3.4 million sq ft of leasable retail and office space, are currently under The Phoenix Mills’ well performing and operational assets, the statement added.
“We are pleased to partner with PML in this joint venture to acquire a stake in these best‐in‐class retail assets in prime locations in India. With the management capabilities of a leading partner like PML, we believe that the joint venture will generate resilient long‐term returns,” GIC chief investment officer Lee Kok Sun said.
The long‐term structural growth prospects in Indian retail industry continue to be optimistic, GIC co‐head (Asia ex‐China), real estate, Kishore Gotety added.
Atul Ruia, Chairman of Phoenix Mills, said, “We are pleased to expand our relationship with GIC, a marquee sovereign wealth fund revered globally. GIC is a like‐minded, long‐term partner who shares our vision for creating, owning and managing best‐in‐class retail and commercial assets. Their investment reaffirms the enormous growth opportunity for quality physical retail infrastructure in India and, in particular, PML’s ability to develop, operate and manage market leading mixed‐use assets.”
The investment platform will also explore explore value‐accretive acquisition opportunities. The proceeds from the joint venture will act as growth capital for both The Phoenix Mills and its subsidiaries.
The development comes at an opportune time for the retail real estate sector. The coronavirus pandemic has impacted businesses across sectors with hospitality, aviation and retail facing the brunt.
Shishir Shrivastava, managing director, The Phoenix Mills, said, “This investment will ensure the continuity of PML’s business model of developing, owning and operating dominant consumption hubs in Tier 1 city‐centric micro‐markets it chooses to be present in. The combination of growth capital availability from this partnership, along with our proven ability to execute large scale projects – will be a powerful force to help us deliver on our vison.”
The Phoenix Mills, which is known for its shopping malls across the country, recently set up a joint venture for a retail project in Kolkata with CPPIB. The developer is betting on the long-term prospects of the sector and expanding its portfolio. While the joint venture with GIC is for existing projects, the tie-up with CPPIB is for a new project.
GIC has been a long-term investor in the country for years. It has exposure across all segments of the market – residential, commercial, retail and hospitality. It struck one of the biggest deals in the Indian real estate ecosystem a few years back when it bought into the rental arm of North India based developer DLF. It has also backed standalone residential projects of DLF in and around Delhi-NCR. It also has a platform with Bangalore-headquartered developer Brigade for a platform focussed on commercial real estate.
The Phoenix Mills claims to have completed development of over 17.5 million square feet spread across retail, hospitality, commercial, and residential asset classes. The company has an operational retail portfolio of approximately 7.0 million square feet across 9 operational malls in 6 gateway cities of India.
It is developing 5 malls with over 6.0 million square feet of retail space in 5 gateway cities of India.
Besides retail, the company has an operating commercial office portfolio with gross leasable area of 1.5 million square feet and plans to add approximately 5.0 million sq. feet of commercial office across existing retail properties going forward.