Phoenix Mills inks pact with GIC for mixed-use retail platform; stock up 8%

GIC will invest by way of a combination of primary infusion and secondary purchase of equity shares for a 26 per cent stake initially at an enterprise value of around Rs 5,600-5,700 crore.

Shares of Phoenix Mills traded 8 per cent higher at Rs 742 on the BSE in early morning deal on Wednesday after the company said that the listed company and few of its SPVs have signed a non-binding term sheet with GIC Private Equity (PE) for the formation of a retail-led mixed-use platform.

“The Phoenix Mills and its subsidiaries, Offbeat Developers Private Limited, Graceworks Realty and Leisure Private Limited and Vamona Developers Private Limited, have jointly signed a non-binding term-sheet with an affiliate of GIC Private limited ('GIC'), for formation and development of a strategic retail-led mixed-use platform,” the company said in a regulatory filing. 

PML will contribute Phoenix Marketcity Mumbai, Phoenix Marketcity Pune, Art Guild House (office), Phoenix Paragon Plaza (office) and Centrium Mumbai (office) as a part of the platform. GIC, on the other hand, will invest by way of a combination of primary infusion and secondary purchase of equity shares for a 26 per cent stake initially at an enterprise value of around Rs 5,600-5,700 crore.

The proceeds from the proposed transaction are intended to be utilised as growth capital for further expansion and acquisition of greenfield, brownfield, operational and/or distressed mall opportunities. Parties may consider various options to monetise this platform, including by way of a REIT, over a three to the five-year period from the closing of the proposed transaction, it said.

"The implied overall equity valuation is at around Rs 4,300-4,400 crore (with an implied cap rate of 6.5-6.6 per cent). We assign equity value of around Rs 3,700 crore to these assets. We believe the deal is at favourable terms, given the challenging phase amid Covid19 led impact," ICICI Securities said in a note.

At 10:08 am, the stock was trading 6 per cent higher at Rs 734 on the BSE, as compared to a 0.31 per cent decline in the S&P BSE Sensex. A combined 539,000 equity shares changed hands on the counter on the NSE and BSE.