In what could be the largest real-estate investment platform transaction set to be concluded this year, private equity major Warburg Pincus is coming together with the developer Runwal Group to invest $1 billion in retail-led mixed-use development across the country.
The joint platform will see both the entities pumping in around $250 million each as their equity contribution, while the rest will be through leveraging.
$500 million would just be the initial contribution, with both the entities open to investing more and expanding the size of the investment platform. Further investments and upping the platform size would be decided by the future growth opportunities.
Under this venture, Warburg and Runwal are looking to build a portfolio of 15-20 retail-led properties in tier-I and II Indian cities over the next five years. Apart from building own properties, the platform would also be looking at acquiring operational and partially-completed projects. A new team will be formed to manage the efforts of this proposed platform that will build, own and operate retail-driven properties.
For starters, the platform will acquire stake in Runwal’s few operational properties and projects that are part of the development pipeline. The developer’s 0.5 mln sqft R Mall in Thane will be the ready and operational property to be moved into the proposed portfolio. Runwal’s proposed mixed-use development on 8-10 acre in Dombivli near Mumbai will also become a part of this platform.
Nearly 1 mln sqft retail project as part of the over 20 acre development in Pune and a proposed development on a 3-acre land parcel in Mumbai’s western suburb Andheri will also be shifted under the platform. The company is developing over 1million sq ft project, including 7 lakh sqft office space and 3.5 lakh sqft retail space, on this 3-acre Andheri land parcel.
Global PE funds including Blackstone Group, Canada Pension Plan Investment Board, APG Asset Management, Xander Group and GIC have started investing in retail sector to diversify their investment portfolios.