Private equity (PE) players are back investing in retail real estate largely due to the limited supply of retail space across the country.
“About $724 million of PE funds as assets has been invested up to September this year (2017),” Ramesh Nair, CEO and Country Head, JLL India, told BusinessLine .
“Compared to the total investment of $1.57 billion witnessed between 2015 and September 2017, this chunk shows how the PE focus is changing as they aim to diversify their portfolios,” he added.
With an aim to create a portfolio of assets as the Indian market expands, some of the leading global PE funds have started investing in retail sector in order to diversify their investment portfolios in the country.
Some of the prominent PE players who have invested in India are Blackstone, Virtuous Retail South Asia (VRSA), Canada Pension Plan Investment Board (CPPIB) and Island Star Mall Developers Pvt Ltd (ISMDPL).
According to Nair, PE investments includes platform and entity-level deals as also acquiring stakes in leading malls across cities.
“The most recent example is of Blackstone forming an India subsidiary named Nexus Malls, which includes a retail portfolio as well as stakes in successful malls like Seawoods Grand Central, Ahmedabad One, Mall of Amritsar, Elante Mall, Treasure Island Next, Treasure Island Indore and Westend,” he said.
Joint venture partnerships and strategic investment platforms have also come under focus. Nair said: “For instance, Xander group’s Virtuous Retail (VR) and APG Asset Management have formed a joint venture called Virtuous Retail South Asia (VRSA). The latter recently acquired North Country Mall in Mohali. With this acquisition, VRSA expanded its portfolio that now includes VR Bangalore, VR Surat, North Country Mall and an upcoming mall in Chennai.”
Canada Pension Plan Investment Board and Phoenix Mills Ltd have joined hands to form a strategic investment platform for development of greenfield and brownfield retail-led assets in India. Island Star Mall Developers, a Phoenix Mills subsidiary that owns Phoenix Market City Bangalore, will serve as the platform for this alliance.