Canada's Pensions Investing Big in India?

Apr 10 22:04 2018 Print This Article

Avik Desi of the Times of India reports, CPPIB invests additional $147 milllion in Island Star Mall:Canada Pension Plan Investment Board (CPPIB) has invested an additional $147 million in Island Star Mall Developers Pvt Ltd (ISMDPL), an investment platform set up with The Phoenix Mills last year, the two companies said.Through this second tranche, CPPIB has increased its investment into Island Stars to about $260 million for a 49 per cent stake with The Phoenix Mills, led by Atul Ruia, owning the remaining,The additional funding will allow ISMDPL to undertake new developments and acquisitions, creating new retail-led mixed-use assets that will offer superior shopping and entertainment experiences. The platform was set up to develop, own and operate retail malls across India."Over the past 12 months, the investment platform has received support from PML and CPPIB to identify opportunities for deployment of these funds in key cities," said Ruia, joint managing director of Phoenix.“Through this platform, we have identified strategic assets over the last 12 months that will help us expand our retail portfolio in India, allowing CPPIB to participate in the growing retail sector in India,” said Andrea Orlandi, managing director, head of real estate investments- Europe, CPPIB.Phoenix, which heralded the transformation of Mumbai's textile mill lands into upscale real estate developments, beginning with Palladium and High Street Phoenix in Lower Parel, has more than 17.5 million sq ft in retail, hospitality, commercial and residential assets.Swaraj Singh Dhanjal of livemint also reports, CPPIB invests additional Rs938 crore in Island Star Mall Developers::Canada Pension Plan Investment Board (CPPIB) Tuesday said it has invested an additional Rs938 crore in Island Star Mall Developers Pvt. Ltd, a platform it co-owns with The Phoenix Mills Ltd.With this, CPPIB has increased its investment in Island Star to a total of Rs1,662 crore, constituting a 49% stake. Last April, the pension fund had announced that it will invest a total of approximately Rs1,600 crore (approximately $250 million) in multiple tranches, to eventually own up to 49% in Island Star.The additional funding will allow Island Star to undertake new developments and acquisitions, creating new retail-led mixed-use assets.“The investment platform we’ve created with The Phoenix Mills Ltd is executing well, and we are pleased to fund the second tranche of the commitment that will allow us to further expand our retail focussed investment platform,” said Andrea Orlandi, managing director, head of real estate investments- Europe, CPPIB.“Through this platform, we have identified strategic assets over the last 12 months that will help us expand our retail portfolio in India, allowing CPPIB to participate in the growing retail sector in India,” Orlandi added.Since its inception, the platform has acquired a land parcel in Pune and is exploring other investment opportunities.You can read CPPIB's press release on this deal here:Canada Pension Plan Investment Board (CPPIB) has invested an additional INR 9.38 billion (C$185 million) into the Island Star Malls Developers Pvt. Ltd. (ISMDPL), the strategic investment platform it co-owns with The Phoenix Mills Limited (PML). Through this second tranche, CPPIB has increased its investment into ISMDPL to a total of INR 16.62 billion (C$328 million), for a 49% ownership stake, with PML owning the balance 51% stake.The additional funding will allow ISMDPL to undertake new developments and acquisitions, creating new retail-led mixed-use assets that will offer superior shopping and entertainment experiences.“The investment platform we’ve created with The Phoenix Mills Ltd. is executing well, and we are pleased to fund the second tranche of the commitment that will allow us to further expand our retail-focused investment platform,” said Andrea Orlandi, Managing Director, Head of Real Estate Investments – Europe, CPPIB. “Through this platform, we have identified strategic assets over the last 12 months that will help us expand our retail portfolio in India, allowing CPPIB to participate in the growing retail sector in India.”Since the inception of the platform, ISMDPL has acquired a land parcel in Pune (Wakad), and is exploring other investment opportunities."I am very excited with the progress that we have made along with CPPIB. In April 2017, when The Phoenix Mills Ltd. co-created the investment platform with CPPIB, we had envisaged to fully deploy the money within one year. Over the past 12 months, the investment platform has received support from PML and CPPIB to identify opportunities for deployment of these funds in key cities. I look forward to this new journey for us where we will continue to create marquee retail destinations," said Mr. Atul Ruia, Joint Managing Director, The Phoenix Mills.Why is CPPIB investing in India? In case you haven't noticed, India's economy is booming. Rishi Iyengar of CNN recently reported that India is building a city from scratch to attract foreign investors.If that doesn't impress you, read about how India's richest man, Mukesh Ambani, is now focusing his attention on banking after disrupting the country's telecom sector, driving weaker players into bankruptcy.There is huge money to be made in India over the coming decades and both domestic and foreign investors are trying to grab a slice of the pie.But unlike China, India's path to growth has been less than stellar. The country has favorable demographics, a young and educated workforce, but corruption and a bureaucratic legal system have plagued the country's growth prospects as has massive inequality which threatens India's "invisible" middle class.Still, despite these structural challenges, there is no denying India is now the world's fastest-growing large economy, and probably will be for years if not decades to come. Some think it will even outgrow China but to do this, it first needs to invest in next-generation value chains to succeed.Retail investors looking to invest cheaply in India can do so through a low-cost ETF like the iShares MSCI India ETF (INDA).As shown below, it got hit recently along with the rout in global public equity markets but has performed nicely over the last couple of years (click on image):

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About Article Author

Pension Pulse

Leo Kolivakis is an independent senior economist and pension and investment analyst with years of experience working on the buy and sell-side. He has researched and invested in traditional and alternative asset classes at two of the largest public pension funds in Canada, the Caisse de dépôt et placement du Québec (Caisse) and the Public Sector Pension Investment Board (PSP Investments). He's also consulted the Treasury Board Secretariat of Canada on the governance of the Federal Public Service Pension Plan (2007) and been invited to speak at the Standing Committee on Finance (2009) and the Senate Standing Committee on Banking, Commerce and Trade (2010) to discuss Canada's pension system.

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