Canadian Pension Plan Investment Board (CPPIB) to sell real estate stake worth $631 million with an Indian developer

Canadian Pension Plan Investment Board (CPPIB) to sell real estate stake worth $631 million with an Indian developer

Canada Pension Plan Investment Board Exits Joint Venture with The Phoenix Mills

The Canada Pension Plan Investment Board (CPPIB) has announced its decision to exit a joint venture with The Phoenix Mills Ltd, marking the end of an almost eight-year partnership in India's retail-growth markets. The exit comes after CPPIB sold its entire 49% stake in Island Star Mall Developers Pvt Ltd (ISMDPL) for approximately Rs 5,449 crore.

The joint venture was formed in 2017 when CPPIB acquired a 30% stake in ISMDPL, a platform for developing retail-led mixed-use properties in India. In 2018, CPPIB increased its stake to 49% by investing an additional amount. The joint venture developed and operated several key assets, including the Phoenix MarketCity mall in Bengaluru's Whitefield area.

The payment to CPPIB will be made in four tranches over three years, either directly by Phoenix Mills or through dividend declarations or share buybacks by ISMDPL. This exit does not affect other ongoing Phoenix Mills partnerships, as CPPIB retains involvement in other joint ventures with Phoenix Mills, including a regional retail project in Kolkata and a mixed-use office asset in Mumbai.

Key Assets and Partnerships

The joint venture executed several retail-led deals across key markets. Island Star Mall, which operates the Phoenix MarketCity mall in Bengaluru, saw its consolidated revenue increase to Rs 919.73 crore in 2024-25 from Rs 612.24 crore in 2023-24 and Rs 302.88 crore the year before.

Alyssum Developers Pvt Ltd, another partner in the joint venture, runs a mixed-use development in Pune, consisting of 'Phoenix Mall of Millennium' and Millennium Towers. Sparkle One Mall Developers Pvt Ltd manages a mixed-use development in Bengaluru consisting of 'Phoenix Mall of Asia' and Phoenix Asia Towers.

In 2021, CPPIB and The Phoenix Mills agreed to invest up to Rs 800 crore into the platform. CPPIB initially invested Rs 724 crore and later Rs 938 crore to increase its stake to 49%. Phoenix Mills could acquire CPPIB's shares directly or indirectly. Additionally, The Phoenix Mills entered a platform deal with Singapore sovereign wealth fund GIC in 2021 to develop mixed-use projects in Mumbai and Pune.

Summary

This transaction reflects CPPIB’s broader portfolio rebalancing in India and signifies the end of a near half-decade-long partnership for retail-led mixed-use developments with The Phoenix Mills. CPPIB's initial investment enabled it to benefit from India’s expanding retail sector, driven by favorable demographics and a growing middle class, generating strong returns on this platform. Despite the exit, CPPIB remains committed to India and continues its partnership with Phoenix Mills in other joint ventures.

Table of CPPIB’s Investment with Phoenix Mills Ltd:

| Year | Event | Stake % | Investment/Value | Details | |-----------|----------------------------------------------------------|----------|-------------------------|---------------------------------------------------------------------------------------| | 2017 | Formation of JV (ISMDPL), CPPIB buys initial stake | 30% | Rs 724 crore | JV formed to develop retail-led mixed-use assets; anchored by Phoenix MarketCity Bengaluru | | 2018 | CPPIB increases stake to 49% | 49% | Additional Rs 938 crore | Expanded portfolio including land purchases in Pune (Rs 160 crore) and Bengaluru (Rs 650 crore) | | 2025 July | CPPIB exits JV, sells entire 49% stake | 0% after exit | Rs 5,449 crore (~$631-871 million CAD) | Sale proceeds paid over 4 tranches across 3 years; JV assets fully repurchased by Phoenix Mills |

1. After a near-decade of collaboration, the Canada Pension Plan Investment Board (CPPIB) has chosen to exit its real-estate focused joint venture with The Phoenix Mills, marking a significant departure from the partnership that had earlier invested in retail-led mixed-use properties.
2. In the realm of finance and investing, the CPPIB's decision to sell its 49% stake in Island Star Mall Developers Pvt Ltd (ISMDPL) for approximately Rs 5,449 crore is a prime example of theorganization rebalancing its portfolio in India, demonstrating its continued interest and commitment in the Indian market.

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