CPPIB Selling Back Half-Stake in India Mall JV to Phoenix Mills for $630M

The Canada Pension Plan Investment Board has agreed to sell its 49 percent stake in an India mall joint venture to its partner in the platform, Mumbai-based developer Phoenix Mills, in a deal valued at INR 54.5 billion ($630 million).

Phoenix Mills will take full ownership of the platform, known as Island Star Mall Developers, which was seeded eight years ago with the Phoenix MarketCity Bangalore mall in Bengaluru and later expanded to include three additional retail developments.

Toronto-based CPPIB and Phoenix Mills have two other joint ventures, a Kolkata mall and an office-led mixed-use project in Mumbai. The longtime partnership has enabled the C$714.4 billion ($522 billion) fund to capture opportunities driven by India’s favourable demographics and expanding middle class, CPPIB said Thursday in a release.

“This investment generated strong returns for the CPP fund,” said Hari Krishna, managing director and head of India real estate at CPPIB. “With net assets totalling C$30 billion in India, we continue to explore investment opportunities in the country across industries.”

Growing Together

Island Star develops, owns and operates retail-led mixed-use developments managed by Phoenix Mills. In April 2017, the two partners launched the venture with CPPIB committing INR 7.2 billion for a 30 percent stake. 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 partners announced in May 2021 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 1.4 million square foot (130,064 square metre) Phoenix MarketCity Bangalore, Island Star owns and is developing three projects at Wakad in Pune, Hebbal in Bengaluru and the city of Indore in Madhya Pradesh.

In a filing with the National Stock Exchange, Phoenix Mills said the transaction would allow the company to gain full control of a portfolio of high-quality assets with scale, stability and clear visibility for future growth.

“As we consolidate our stake in the JV, we remain focused on building on this strong foundation and creating some of the most vibrant and high-performing mixed-use destinations in the country,” said Phoenix Mills chairman Atul Ruia.

Ventures Carry On

CPPIB and Phoenix Mills continue to collaborate on their Mindstone JV, which is developing a Kolkata mall with a potential leasable area of 1 million square feet. In 2021, CPPIB committed to investing INR 5.6 billion in Mindstone in tranches for an ultimate equity stake of 49 percent.

That same year, the partners set up a JV to develop an office-led mixed-use asset in Mumbai’s Lower Parel as part of a larger mixed-use development at the Phoenix Palladium mall complex. CPPIB committed to investing INR 13.5 billion in tranches for an ultimate equity stake of 49 percent.

The Plutocrat venture will develop office space with a potential leasable area of 1 million square feet and flagship retail space with a potential leasable area of 200,000 square feet.