Phoenix Mills gains on partnering GIC for investment platform

The Phoenix Mills rose 2.33% to Rs 808.60 after the company tied up with Singapore's GIC to form a strategic investment platform in India.

The Phoenix Mills (PML) and GIC, Singapore's sovereign wealth fund, announced the execution of definitive documents to form a strategic investment platform to develop, own and operate retail-led, mixed-use developments in India.

Earlier in December 2020, PML had announced signing of a non-binding term sheet with GIC for formation of this retail-led, mixed-use platform. PML through its subsidiaries, Offbeat Developers (ODPL), Graceworks Realty & Leisure (GRLPL) and Vamona Developers (VDPL) and GIC will be parties to the transaction (hereinafter, ODPL, GRLPL and VDPL together referred to as "PML subsidiaries"). PML will contribute the following retail and commercial assets to the platform.

GIC will initially acquire an equity stake of 26.4% in the PML subsidiaries by investing an aggregate amount of approximately Rs 1111 crore by way of a combination of primary infusion and secondary purchase of equity shares in the said PML subsidiaries. The platform is valued at a pre-money enterprise value of Rs 5500 crore. GIC's stake may further increase to 33%-36% in the above-mentioned subsidiaries through an additional infusion of up to Rs 400 crore within 12-month period from closing.

The primary proceeds from the transaction are intended to be utilized by the PML subsidiaries as growth capital for further expansion and acquisition of greenfield, brownfield, operational and/or distressed mall opportunities. The secondary proceeds will bolster PML's safety net in the near term, fund various under construction projects and act as war chest for further acquisitions in the medium term. GIC and PML may consider various options to monetize this platform, including by way of a REIT, over a three to five-year period from the closing of this transaction.

Lee Kok Sun, chief investment officer of real estate, GIC, said, "We are pleased to partner with PML in this Joint Venture to acquire a stake in these best-in-class retail assets in prime locations in India. With the management capabilities of a leading partner like PML, we believe that the Joint Venture will generate resilient long-term returns. GIC has been investing in India for more than a decade and our long-term confidence in the Indian real estate market remains strong."

On a consolidated basis, The Phoenix Mills' net profit jumped 33.2% to Rs 64.28 crore on a 3.4% decline in net sales to Rs 385.84 crore in Q4 March 2021 over Q4 March 2020.

The Phoenix Mills is a leading retail mall developer and operator in India and is the pioneer of retail-led, mixed-use developments in India with completed development of over 17.5 million square feet spread across retail, hospitality, commercial, and residential asset classes.

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