GIC, a sovereign wealth fund from Singapore, adds $400 million to the joint venture with Phoenix Mills

1 Jul 2022 , 12:36 PM

GIC, the sovereign wealth fund of the Singaporean government, increased its total investment to Rs1,511 crore by making an Rs400 crore investment in three subsidiaries of The Phoenix Mills by purchasing an equity position in these companies through a private placement.

The investment is the second instalment of the strategic relationship between GIC and India’s top developer and operator of retail-led mixed-use assets, with the goal of establishing a joint venture to create, own, and manage retail-led mixed-use complexes throughout the country.

By investing a total of Rs1,111 crore in the Phoenix Mills’ chosen portfolio last year, GIC gained an ownership share of almost 26.44%, or Rs5,500 crore. The Singapore government entity now controls 32.90% of each of these subsidiaries, with Phoenix Mills holding the
remaining 67.10%.

Through its indirect wholly-owned subsidiary Reco Zinnia Pvt Ltd, GIC has made investments in these subsidiaries (RZPL). Offbeat Developers Pvt Ltd (ODPL), Graceworks Realty and Leisure Pvt Ltd (GRLPL), and Vamona Developers Pvt Ltd (VDPL), subsidiaries of Phoenix Mills, have each received equity investments of Rs219 crore, Rs149 crore, and Rs31 crore, respectively.

The portfolio for this transaction consists of 3.7 million square feet of mixed-use buildings with a strong retail component, including workplaces in Mumbai and Pune’s major urban centers. Along with three commercial assets in Mumbai, it also contains two upscale malls: Phoenix Market City, Kurla in Mumbai, and Phoenix Market City, Pune.

Currently, these are some of Phoenix’s most valuable and effective operating assets. The overall investment was made using both main infusion and secondary equity share purchases.

In three to five years following the conclusion of this deal, GIC and Phoenix may take into account various ways to monetize this platform, including a Real Estate Investment Trust (REIT).

The main revenues from the deal will be used by Phoenix’s subsidiaries as growth capital for the development and the purchase of new mall opportunities, whether they be greenfield, brownfield, operational, or distressed. The secondary revenues will support Phoenix’s efforts to establish a safety net in the short term, finance a number of ongoing projects, and serve as a war chest for additional acquisitions in the long run.

The investment shows that international investors are interested in Indian mall expansions and are optimistic about the recovery of retail consumption after the Covid-19 outbreak.

Retail consumption has rebounded and made steady progress in recovery, unaffected by the interruption brought on by the Covid19 pandemic during the past two years. This has given mall developers the confidence to keep concentrating on their ambitions to build more malls across India’s major cities.

Due to a strong recovery in retail activity brought on by pent-up demand and retaliation shopping after the Covid19 pandemic, The Phoenix Mills will be operationalizing four new sizable malls in the key consumption centers of Pune, Bangalore, Ahmedabad, and Indore over the course of the next 12 to 15 months.