Canada’s biggest pension fund will exit a joint venture with India’s Phoenix Mills in a cash deal worth 54.49 billion rupees ($630.9 million), the mall operator said on Thursday.
CPP Investments’ exit comes at a time when brick-and-mortar retailers are grappling with reducing footfalls and increasing competition from e-commerce platforms.
The rise of quick-commerce platforms – which deliver food, groceries, home decor and even electronics under 10 minutes – has exacerbated this trend.
The deal, which involves CPP’s sale of a 49% stake in Island Star Mall Developers, gives Phoenix Mills full control of the Phoenix MarketCity mall in the South Indian city of Bengaluru.
Island Star – a joint venture the two entities formed in 2017 – also operates three other malls and two commercial office spaces in Bengaluru, Indore and Pune through its units.
Phoenix will use its surplus cash and debt to fund the deal. CPP Investments will receive the payment in four tranches over the next three years.
Cash flow from Island Star to Phoenix is expected to be more efficient post-deal and result in an up to four-fold surge in core profit over time, the mall operator said.
Traditional retailers have reported a drop in frequency of customer visits to stores and a subsequent decline in foot traffic, with the trend steeper in top urban markets and across larger store formats, a report by PwC said.
