Fund managers from Canada’s biggest pension plan are teaming up with Indian mall developer Phoenix Mills on a retail joint venture in Alipore, Kolkata.
The Canada Pension Plan Investment Board and its longtime Indian partner will develop a retail centre with a potential leasable area of 1 million square feet (92,903 square metres) under a JV called Mindstone Mall Developers Private Ltd.
CPPIB will commit to investing INR 5.6 billion ($77 million) in Mindstone in tranches, for an ultimate equity stake of 49 percent, the partners said in a release issued last Friday. The target completion date for the project in Alipore, one of India’s most affluent neighbourhoods, is the second half of 2024.
“India is one of the most important markets for us in Asia Pacific and a critical part of our long-term strategy,” said Hari Krishna, managing director for India real estate at CPPIB.
With the latest investment, CPPIB’s equity commitment to multiple ventures with Phoenix Mills will rise to more than INR 26.2 billion.
Back in April 2017, the two partners launched a similarly structured deal in which CPPIB committed INR 7.2 billion for a 30 percent stake in Phoenix Mills’ India retail platform, Island Star Mall Developers. By April 2018, the Canadian investor had upped its total investment to INR 16.62 billion for a 49 percent stake in the platform.
The Island Star platform develops, owns and operates retail-led mixed-use developments across India, all managed by Phoenix Mills. The partners announced Friday that they would extend their commitments to the Island Star venture, agreeing to invest collectively up to INR 8 billion in tranches as required, in the ratio of their respective shareholdings.
In addition to the seed asset Phoenix Marketcity, a mall in Bangalore’s Whitefield area, Island Star owns and is currently developing three retail-led, mixed-use developments at Wakad in Pune, Hebbal in Bangalore and the city of Indore in Madhya Pradesh.
Phoenix Mills chairman Atul Ruia said the Mindstone project in Kolkata would establish the developer’s footprint in the east of the country.
“This investment bears testament to the attractive long-term prospects of our robust business model of creating destination consumption hubs in key cities of India,” Ruia said.
Action From GIC
CPPIB’s backing has helped Phoenix Mills to build a portfolio that will measure over 17.5 million square feet of retail, hospitality, commercial and residential assets when completed. The company has an operational retail portfolio of about 7 million square feet of retail space at nine malls in six gateway cities of India.
Aside from its Canadian partnership, the developer has also found friends closer to home. Last December, Phoenix Mills revealed that it had signed a term sheet with an affiliate of Singaporean sovereign wealth fund GIC to set up a retail-led mixed-use platform.
Under the agreement, GIC is investing in Phoenix Mills subsidiaries through a mix of primary infusions and secondary purchases of equity shares. The fund will initially acquire an equity stake of 26 percent and may further increase its stake to up to 35 percent within a year from the closing of the transaction.
As part of the platform, Phoenix Mills contributed Phoenix Marketcity malls in Mumbai and Pune, as well as commercial assets such as Art Guild House, Phoenix Paragon Plaza and Centrium in Mumbai, India’s Mint website reported. The assets constitute a gross leasable retail area of 2.33 million square feet and office space of 1.03 million square feet.