OM fund takes 25% stake in Prozone SPV

Triangle India Real Estate Fund, promoted by the South Africa-based Old Mutual Property Investments and Mumbai-based ICS Realty, has picked up 25 per cent stake in the special purpose vehicle (SPV) of the mall developer Prozone Liberty, for nearly Rs 450 crore.

The SPV holds the Prozone Liberty's upcoming malls at Aurangabad, Jaipur, Nagpur and Indore. These malls are reportedly valued at Rs 1,800 crore. Prozone Liberty is a joint venture between apparel retailer Provogue India and the UK-based Liberty International.

Old Mutual executives could not be contacted for comments. When contacted, Provogue India's managing director Nikhil Chaturvedi said, "We have not finalised the deal. We will let you know once we sign it.''

The JV was in talks with private equity players such as GIC of Singapore Government and Qatar Investment Authority and after deliberations with the fund, the company chose to go with it, sources said.

Each mall exceeds 1 million sq feet in area. The Aurangabad mall is spread over 2 million sq feet and is pre-leased to Shopper's Stop, Westside and Croma among others. The Indore mall covers four million sq ft.

Prozone has plans to develop 12 malls in 3-4 years and its eight malls that are coming up at Mysore, Surat and Raipur have been valued at Rs 4,000 crore, sources said.

Provogue has raised Rs 202 crore from Liberty Capital and Rs 146 crore through a private placement with PE players including New Vernon, Blackstone, Genesis Capital and Fidelity.

The stake purchase in Prozone is Triangle fund's first investment in the Indian property sector. Old Mutual already has a life insurance JV with Kotak Mahindra and property services company in JV with ICS.

The $4.5 billion Old Mutual Properties manages 68 malls worldwide, with over 4500 tenants, including three super-regional and 11 regional malls and its projects extend to Africa, central and eastern Europe and West Asia.

Provogue's stock ended at Rs 1094.10, up by 1.31 per cent from yesterday's close, despite the subdued equity market conditions.

Technopak estimates that the country would need mall space of 700 million sq feet in four years, as against the expected addition of 200 million sq feet, leading to a shortfall of 400 to 500 sq feet.

According to Indian Venture Capital Journal, nearly 30 per cent of the private equity funds are expected to flow into retail in a couple of years.

Singapore's mall developer CapitaLand has formed a joint venture with the Rs 350-crore Kshitij Venture Capital fund and Pantaloon Retail to set up over 50 malls in the country.