Phoenix Mills (PML) today announced a 26% stake buyout in its Bangalore market city project from Horizon Funds for Rs680M. The transaction, in our view, seems to have been done at fair valuation levels.
PML’s board has approved a share purchase agreement to buy 26% stake in Bangalore (E) market city project (“Island Star”) from Horizon funds for Rs680M. Horizon (Everstone Capital) was one of initial private equity investors in the Bangalore market city project and is also an investor in Kurla and Pune market city. Separately, IL&FS stake has also increased by 4% in the same project on valuation adjustment as per initial investment agreement.
With this acquisition (26%) and IL&FS stake adjustment (4%), PML’s stake in the SPV will increase to 68% from ~46.5%, thereby providing a majority control over the asset.
Bangalore market city is a 1.9msf mixed used project including (a) ~0.9msf of retail malls already operational with occupancy of 66% (pre leases of 88% in place) and average rentals of ~Rs60psf+ levels; and (b) 0.6msf of residential space which is yet to be launched and c) 0.3msf of serviced apartments (converted from hotel earlier).
