Indian mall developer Phoenix Mills raises $146.6m via QIP

Photo: Reuters

Mall developer Phoenix Mills Ltd raised 1,100 crore from institutional investors through a qualified institutional offering (QIP) this week, said two people aware of the development, at a time malls are seeing sharply lower footfalls amid a health crisis and weak consumer sentiment.

The QIP offering saw demand for five times the number of shares offered, underscoring that despite near-term challenges facing the realty sector, investors, flush with liquidity, are keen to back market leaders in commercial and retail real estate.

Foreign and domestic institutional investors took part in the share sale, including a large cheque from Singapore’s sovereign wealth fund GIC, said the first person cited above, who spoke on condition of anonymity. The person did not disclose the quantum of investment by GIC.

Emails sent to Phoenix Mills and GIC did not elicit a response. Kotak Mahindra Capital and UBS advised Phoenix Mills on the QIP.

GIC was one of the largest investors in the recent 4,500 crore initial public offering (IPO) of Mindspace Business Parks REIT, which has a portfolio of almost 29 million sq. ft of office space across metros. GIC, along with the government of Singapore, invested 688.9 crore in the IPO.

The nationwide lockdown and localized restrictions in several states later forced mall operators to either waive or defer rentals for most tenants.

“Phoenix Mills reported retail rental income decline of 69.8% y-o-y to 88.5 crore mainly due to covid-19 led lockdown and rental waiver, thereof. We note that the company has agreed to a 50% rental waiver in the lockdown period for 75-80% retailers. For a further period of up to six months in FY21, rentals are expected to be restructured with reduction in minimum guarantee by ~25-30% but with higher revenue share,” said ICICI Direct in a 31 July report.

But investors are betting that as things start to recover, market leaders such as Phoenix Mills will be at a significant advantage than peers, said the second person cited above, also requesting anonymity.

“Demand will eventually come back. It is not as if people are going to stop going to malls. And companies such as Phoenix Mills, which has 500 crore cash on its balance sheet, and didn’t really have an urgent need to raise cash, will be better suited to tap that recovery,” he added.

The Reserve Bank of India’s recent consumer confidence survey showed that individuals are upbeat about their prospects in a year’s time though they remain sceptical on the current state of things.

The article was first published on Livemint.com

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.