Canada Pension Plan Investment Board (CPPIB) and The Phoenix Mills Ltd (PML) have formed a strategic investment platform, Island Star Mall Developers Pvt. Ltd (ISMDPL), to develop, own and operate retail-led mixed-use developments across India.
CPPIB will initially own 30 per cent of the platform with an equity commitment of approximately Rs 724 crore.
CPPIB plans to invest approximately Rs 1,600 crore in multiple tranches, to own up to a 49 per cent stake in the platform.
Pre-money enterprise value of ISMDPL is pegged at approximately Rs 2,200 crore.
ISMDPL owns Phoenix MarketCity Bangalore, one of the top performing shopping malls in the country. Opened in 2011, the mall has a gross leasable area of approximately one million square feet and is centrally located in Whitefield, a prominent residential hub and among the largest commercial areas in Bengaluru.
“We believe that India will be a leading source of global growth in the coming decades and that 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,”Andrea Orlandi, Managing Director, Head of Real Estate Investments – Europe, CPPIB.
The funds invested will be applied towards acquiring and developing both greenfield assets on newly purchased land banks, as well as existing operating retail assets that are expected to be transformed into highly successful malls. PML will manage all development 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 Indian retail sector is forecast to see sustained growth over the long term, primarily due to favourable demographics and the rise of the middle class. At the same time, international retailers are increasingly attracted to India as a growth market, which is leading to a strong demand for space in high-quality, well-located shopping malls.