Singapore sovereign wealth fund GIC Pte Ltd and Mumbai-listed developer The Phoenix Mills Ltd have signed a deal to set up an investment platform to build, own and operate shopping malls and office complexes in India.
GIC will acquire a significant minority stake in a $733 million portfolio of five projects in Mumbai and Pune, Phoenix Mills said in a statement. These assets cover a total area of 3.4 million sq ft of leasable retail and office space.
GIC, already one of the biggest foreign investors in India’s real estate sector, will pump a total of Rs 1,511 crore ($206 million) into two phases. It will first put in Rs 1,111 crore to buy a 26.44% stake in these assets. It will later invest Rs 400 crore more to increase its stake to between 32.80% and 35.91%.
The move comes six months after Phoenix Mills and GIC first indicated about the tie-up in December last year. It also comes just days after the Indian developer expanded its real estate investment platform with Canada Pension Plan Investment Board (CPPIB).
CPPIB committed up to Rs 952 crore ($131.5 million) in fresh capital to the platform. This includes Rs 560 crore to buy a 49% stake in Mindstone Mall Developers Pvt Ltd, a new joint venture with Phoenix that is developing a retail centre in Alipore, Kolkata.
Kishore Gotety, co‐head of Asia excluding China of real estate at GIC, said the new platform will benefit from the long‐term structural growth that the Indian retail industry offers due to favourable demographics, urbanisation, growing middle class, and increasing consumerism trends.
Atul Ruia, chairman of Phoenix Mills, said the company intends to jointly explore “value‐accretive acquisition opportunities” through this platform with GIC.
The developer will use the money raised from the transaction as growth capital to enhance its portfolio of annuity income assets, he added.
Phoenix has an operational retail portfolio of about 7 million square feet across nine shopping malls in six cities. It is developing five malls with 6 million square feet of retail space in five cities.
It also has an operating office portfolio with gross leasable area of 1.5 million square feet and plans to add
about 5 million sq. feet of office space across existing retail properties.