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CPPIB embarks on India retail strategy

The Canadian investor plans to invest up to $246m in its maiden retail investment partnership in India.

Canada Pension Plan Investment Board (CPPIB) has formed a partnership with the Mumbai-based developer Phoenix Malls to develop, own and operate retail-led mixed-use developments in India.

The partnership marks CPPIB’s entry into India’s retail sector that has increasingly been attracting substantial global institutional investment.

The Canadian investor will initially make a INR 7.24 billion ($110 million; €103 million) equity commitment for a 30 percent stake in Island Star Mall Developers, the strategic investment platform created for the partnership. Overtime, the pension plan plans to invest approximately INR 16 billion in multiple tranches to own up to a 49 percent stake, according to a company announcement.

As per the statement, the pre-money enterprise value of the investment platform is around INR 22 billion.

“We are delighted to partner with the Phoenix Mills limited to launch our first retail real estate venture in India where we will focus on acquiring or developing high-quality retail assets across India's top cities,” said Andrea Orlandi, managing director, head of real estate investments for Europe at CPPIB.

“We believe that India will be a leading source of global growth in the coming decades and that there will continue to be attractive investment opportunities for CPPIB. We look forward to expanding our venture with Phoenix Mills, an experienced retail operator and well-aligned partner.”

The funds raised will be used to acquire and develop greenfield assets on newly purchased land banks as well as existing retail assets that will be repositioned into malls. Phoenix Malls Limited will be managing the development and operational assets in the partnership.

CPPIB’s foray into Indian retail follows strategic investments by the Dutch pension administrator APG Asset Management, and Blackstone among other global firms. In November, APG formed a $450 million partnership with the global investment manager Xander Group and its affiliate Virtuous Retail to acquire shopping centers across the country.