Economic Times: December, 2016
MUMBAI | BENGALURU: Realty developer Phoenix MillsBSE 0.76 %' subsidiary Island Star Mall Developers (ISML) has entered into a non-binding pact with Canada Pension Plan Investment Board (CPPIB) to acquire up to 49% in ISML over three years.
ISML owns and operates a retail mall in Bangalore known as Phoenix Marketcity, Bangalore. The subsidiary recorded revenues of Rs. 164.30 crores and net profit of Rs 37.10 crore for financial year ended March 2016. ISML is expected to utilize the funds raised through this stake sale for business development and growth purposes.
"If the transaction is consummated in its entirety, then the company's (Phoenix Mills) shareholding in ISML shall stand reduced to, but in any event not below 51% of the paid-up equity capital on a fully diluted basis," Phoenix Mills said in a regulatory filing.
ET had earlier reported that the mall developer Phoenix group is in talks with Canadian Pension Plan Investment Board (CPPIB) to form a $300 million joint platform to buy land parcels and develop malls across the country. The plan also included bringing Phoenix's existing mall projects under this platform. However, Phoenix's mall in Lower Parel was to be kept out of it.
The developer is looking to leverage on its brand Phoenix Marketcity to be a pan-India mall developer and operator given the success of its malls in Mumbai, Pune, Bengaluru and Chennai.
Listed firm, The Phoenix Mills owns mall projects under Phoenix Marketcity brand. It runs its flagship High Street Phoenix and luxury mall Palladium in Mumbai, counted among the top revenue-making malls in the country. The Mumbai-headquartered group also owns four Marketcity projects in Mumbai, Pune, Bengaluru and Chennai.
"We are currently operating over 6 million sq ft retail space across the country. We would like to retain our top position in this segment and therefore are looking at Greenfield and brownfield projects. To support this, we have been evaluating various fund raising avenues," Shishir Shrivastava joint Managing Director, The Phoenix Mills had told ET then. However, he had declined to comment on talks for a platform with CPPIB.
In a recent regulatory filing, the company had announced that it has entered into agreements to buy share and debenture holdings of certain subsidiary and affiliate companies including Gangetic Hotels, Pallazzio Hotels & Leisure, Classic Mall Development Co and Alliance Spaces among others.
CPPIB, the giant pension fund that makes private-equity investment, recently opened an India office to look for direct opportunities in the country. It also has a joint venture platform with Shapoorji Pallonji to buy commercial assets across top cities in the country.
India's retail real estate sector received $149 million or about Rs 1,000 crore of private equity investment in the first five months of 2016, according to a report by JLL India. This accounted for 8% of the total PE investment in India during the period, beating expectations of most analysts and marked a turnaround after the lack of investor interest since 2008 baring the singular exception of 2012.
In a recent deal Singapore-based GIC investing $149 million in Sheth Developers' Viviana mall at Thane. Another major deal is in progress, with a US private equity fund looking to buy a large retail project in Navi Mumbai.