APG continues India retail drive with $175m re-up – Exclusive

The retail sector is now APG Asset Management’s biggest bet in India in terms of total equity committed. The Dutch pension fund asset manager has committed $175 million in additional equity to Virtuous Retail South Asia, the retail platform set up in partnership with the emerging markets investment firm The Xander Group. Virtuous Retail South Asia (VRSA) is an Indian developer and operator of lifestyle shopping centers.

Following this re-up, APG’s total equity commitment to VRSA now stands at around $450 million. APG is the majority shareholder in VRSA.

In a statement announcing the commitment, Patrick Kanters, managing director and global head of real assets for APG, said the new equity commitment to VRSA reflects APG’s continued support for the growth of the platform and its conviction in the retail sector in India.

Back in November last year, APG’s investment in VRSA marked its debut into the Indian retail sector. The Singapore-headquartered VRSA, set up as a fully integrated retail real estate company, is both partners’ exclusive platform to build a retail presence in India. VRSA was initially seeded with a portfolio of three shopping centers (developed by Virtuous Retail in Bangalore, Surat and Chennai and previously 100 percent owned by VRL, a retail-focused commingled private equity real estate fund set up by Virtuous Retail). The combined gross asset value of the assets was INR 20 billion ($300 million; 270 million). In addition, APG and Xander committed $150 million as growth capital.

VRSA’s focus lies in developing, acquiring and repositioning single retail assets and portfolios across the country via direct investments. Its current portfolio comprises approximately 5.5 million square feet across four shopping centers (this includes a 2 million square foot center acquired in Chandigarh Capital region in May this year for INR 7 billion). The platform aims to grow the portfolio by adding centers in markets including the National Capital Region of Delhi, Mumbai, Pune, Hyderabad and Kolkata.

PERE understands from one source familiar with the strategy that high teen IRRs are being targeted from these retail investments.

Commenting on VRSA’s strategy, Sid Yog, founder of the Xander Group and chairman of VRSA, said: “VRSA has expanded significantly across all paramaters over the last year. We have grown the portfolio by adding VR Punjab, the team has expanded to around 250 people and NOI has seen a healthy growth of close to 20 percent in our stabilised centers.”

For APG, India has been a key investment market alongside Australia in recent years. The investor has committed approximately $1 billion across its residential, office and retail joint venture platforms in the country.