City-based real estate player Runwal Group and global private equity firm Warburg Pincus have formed a US$ 1 billion joint venture (JV) for a retail mall platform.
“Both partners will commit US$ 200 million each in the form of equity and shall raise another US$ 600 million in the form of debt to create a corpus of US$ 1 billion, to invest in and develop high quality shopping malls across Tier I, II, and III cities in India which have a sizeable population and growing disposable incomes,” the Mumbai-based developer said in a statement.
An affiliate of Warburg Pincus and Runwal Developers will hold a 50 percent stake each in the platform.
This investment is the first mall platform which Warburg Pincus has backed in India.
The platform will look to build large destination malls as well as small hypermarket and cinema anchored community malls.
Runwal Group already operates four malls in Mumbai with a total leasable area of approximately 2 million sq ft, including its flagship R-City mall in Ghatkopar which has a total leasable area of 1.2 million sq ft.
Going forward, the platform would look to acquire both greenfield as well as brownfield projects.
“Following Warburg Pincus’ successful partnerships in the retail mall space in China, Vietnam and Indonesia, with entities such as Red Star Macalline, Vincom Retail and NWP Retail, this investment represents the first mall platform which the firm has backed in India,” the statement said.
The platform will be led by chief executive officer Sanjay Dube who was most recently the CEO of Landmark Hospitality.
“The retail real estate sector is expected to see tremendous growth going forward driven by lack of community spaces in Indian cities and the growing disposable income resulting in greater spend on entertainment and branded retail. We look forward to working closely with Warburg Pincus and leveraging their successful experience in helping create market leading platforms in the retail mall space in other parts of Asia,” Sandeep Runwal, Managing Director at Runwal Group said.
Commenting on the JV, Warburg Pincus India Managing Director Anish Saraf said, With a growing middle class and expansion of branded retail, shopping malls present a meaningful opportunity to participate in India’s evolving consumption story.”
Runwal Group’s strong retail knowledge and operational experience, together with Warburg Pincus’ ability to support creation of market leading enterprises, will enable the joint venture to benefit from India’s long-term growth potential and become the country’s pre-eminent retail mall platform, he further said.