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APG establishes $450m India retail platform

APG Asset Management has formed its second real estate partnership with Xander Group in India to create one of the largest retail platforms in the country.

APG Asset Management has made its first investment in India’s retail sector via the launch of a $450 million retail platform in partnership with Virtuous Retail and the Xander Group.

The Dutch pension fund asset manager and Virtuous Retail (VR), an Indian developer and operator of lifestyle shopping centers that is sponsored by Xander, have jointly formed a new fully integrated retail real estate company called Virtuous Retail South Asia (VRSA). Both partners will use the Singapore-headquartered VRSA as their exclusive platform to build out a retail presence across India, according to an official statement released today.

APG will be the majority shareholder in VRSA with a 77 percent stake while Xander will hold the remaining 23 percent.

VRSA has acquired an initial portfolio of three shopping centres that have a combined gross asset value of INR 20 billion ($300 million; €270 million). These three flagship lifestyle centers spread across 3.5 million square feet and developed by VR in Bangalore, Surat and Chennai, were 100 percent owned by VRL, a retail-focused commingled private equity real estate fund set up by VR.

Additionally, APG and Xander have also committed $150 million in equity to VRSA to fund the acquisition of new assets. VRSA will focus on developing, acquiring and repositioning single retail assets and portfolios across the country via direct investments.

The entire management and operational platform of VR in India comprising a staff of 150 people would now be working under the VRSA platform.

“This is a landmark transaction for Indian retail real estate at a time when the sector is at an inflection point,” said Sachin Doshi, managing director and head of private real estate investments for Asia-Pacific at APG. “With the arrival and expansion of major global and domestic brands, coupled with severe shortage of high quality malls, we believe organized retail is in the early stages of take-off in the country.”

He further added that the transaction allows APG to “get immediate scale and access to a portfolio of dominant shopping centers and management capability through the integration of VR’s Indian management and operating platform into VRSA.”

Rohit George, who was earlier responsible for overseeing Xander’s retail portfolio in India, has now relocated to Singapore as managing director for VRSA. He joins two APG and two Xander representatives on VRSA’s board.

Sid Yog, founder of VR and Xander, who will now chair the VRSA board, said in the statement: “By partnering with APG, a likeminded long-term investor, we take a big leap forward in the evolution of VR’s India platform. The transaction creates a self-managed operating company in line with successful global trends of well capitalised ventures, with clearly defined strategies, not limited by fund life.”

APG also invests in a club fund, focused on acquiring income-generating commercial office properties in India, with Xander Investment Management, the investment arm of The Xander Group. Established in May 2014 this partnership marked the entry of APG into India’s office sector. The initial size of the club fund, that has APG as the lead institutional investor, was $300 million at the time of its launch.

APG currently manages a €8.5 billion real estate portfolio in Asia Pacific across public and private markets.