Canada Pension Plan Investment Board (CPPIB) and The Phoenix Mills Limited (PML) announced participation in 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% of the platform with an equity commitment of approximately INR 7.24 billion (C$149 million). CPPIB plans to invest approximately INR 16 billion (C$330 million), in multiple tranches, to own up to a 49% stake in the platform. Pre-money enterprise value of ISMDPL is pegged at approximately INR 22 billion (C$454 million).
ISMDPL owns Phoenix MarketCity Bangalore, one of the top performing shopping malls in the country. Opened in 2011, the mall has gross leasable area of approximately one million square feet and is centrally located in Whitefield, a prominent residential hub and amongst the largest commercial areas in Bengaluru.
“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 high-quality retail assets across India’s top cities,” said Andrea Orlandi, Managing Director, Head of Real Estate Investments – Europe, CPPIB. “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.”
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,” stated Atul Ruia, Joint Managing Director, The Phoenix Mills Limited.
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 strong demand for space in high-quality, well-located shopping malls.