Phoenix Mills to buy CPP Investments' 49% stake in joint retail realty platform for Rs 5,450 cr
The Phoenix Mills Ltd will buy a 49% stake in its joint venture firm Island Star Mall Developers Pvt Ltd (ISMDPL) from CPP Investments for Rs 5,450 crore as part of its growth strategy.
At present, The Phoenix Mills and Canada Pension Plan Investment Board (CPP Investments) hold 51 per cent and 49 per cent stake in ISMDPL, respectively.
Post completion of this deal, the company's stake in ISMDPL will rise to 100 per cent from the current 51 per cent. The company develops retail-led mixed-use destinations. According to a regulatory filing on Thursday, The Phoenix Mills, CPP Investments and ISMDPL have entered into an arrangement to provide an exit to CPP Investments from this JV.
The company's board has approved this agreement. "CPP Investments shall receive an aggregate cash consideration of Rs 5,449.16 crore from the company and/or ISMDPL," the filing said. The amount will be paid to CPP Investments in four tranches over a period of three years.
The Phoenix Mills might acquire 49 per cent equity stake of CPP Investments in the ISMDPL, or the JV firm could choose from options like dividend, share buyback and selective capital reduction. The total portfolio of ISMDPL is around 4.5 million sq ft. ISMDPL owns 'Phoenix MarketCity Bengaluru' while its three subsidiaries own mix-use development in Pune, Bengaluru and Indore. The JV firm posted a turnover of Rs 919.73 crore during the last fiscal. "The proposed transaction is aligned with the company's strategic vision to consolidate ownership in high-performing assets comprised in the ISMDPL platform, with a clear long-term growth trajectory and generate sustainable long-term value," The Phoenix Mills said.
The company's developments are spread across retail, hospitality, commercial offices, and residential asset classes across major cities.
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