Runwal Group joins hands with Warburg Pincus to create $1-bn retail mall platform

Runwal Group has formed a joint venture with an affiliate of private equity firm Warburg Pincus to create a retail mall platform.

Both partners will commit $200 million each in the form of equity and would raise another $600 million in the form of debt to create a corpus of $1 billion, to invest in and develop high quality shopping malls across tier 1, 2, and 3 cities in India, which have a sizeable population and growing disposable incomes.

The platform will look to build large destination malls as well as smaller hypermarket and cinema anchored community malls. Retail malls in several countries have transformed from pure shopping areas into social, community and entertainment centres. The platform would look to capitalise on this trend by adopting mall designs that would offer high quality experience for tenants and customers.

Runwal Group operates four malls in Mumbai, with a total leasable area of approximately 2 million sq ft. This includes its flagship R-City mall in Ghatkopar, which has a total leasable area of 1.2 million sq ft. The platform will be seeded with several pipeline projects that are currently under development and will also have the option of acquiring some of Runwal Group’s operational retail malls.

Going forward, the platform would look to acquire both greenfield as well as brownfield projects. The platform would be led by Sanjay Dube, who will join as the CEO. Sanjay was most recently the CEO of Landmark Hospitality (part of Landmark Group) and prior to that, he led Unilever’s operations in Central and Eastern Europe. Before his stint in Europe, Sanjay spent 23 years across Unilever, Colgate Palmolive and Lakme Lever in India.

Following Warburg Pincus’ successful partnerships in the retail mall space in China, Vietnam and Indonesia, with entities such as Red Star Macalline, Vincom Retail and NWP Retail, this investment represents the first mall platform that the firm has backed in India. An affiliate of Warburg Pincus and Runwal Developers Pvt Ltd will each hold a 50 per cent stake in the platform.

Commenting on the formation of the joint venture, Sandeep Runwal said, “The retail real estate sector is expected to see tremendous growth going forward, driven by lack of community spaces in Indian cities and growing disposable income, resulting in greater spend on entertainment and branded retail. We look forward to working closely with Warburg Pincus and leveraging their successful experience in helping create market leading platforms in the retail mall space in other parts of Asia.”

Anish Saraf, Managing Director, Warburg Pincus India said: “With a growing middle class and expansion of branded retail, shopping malls present a meaningful opportunity to participate in India’s evolving consumption story. Runwal Group’s strong retail knowledge and operational experience, together with Warburg Pincus' ability to support creation of market leading enterprises, will enable the joint venture to benefit from India’s long-term growth potential and become the country’s pre-eminent retail mall platform.”

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