With Prestige retail assets, Blackstone to be largest mall operator in India

Bengaluru: US-based private equity major Blackstone Group is set to become the largest mall operator in India with the acquisition of Prestige Group’s retail portfolio, nearly doubling the total area under operations to 10 million square feet, two industry executives aware of the deal told ET.
The transaction is part of the $1.2-billion deal currently on between Blackstone and the Prestige Group for the income-generating assets of the latter, with the retail arm being valued at $300 million.

The acquisition will see Nexus Malls—Blackstone’s retail brand that operates nine malls in seven cities—merge Prestige’s portfolio with its existing business in India.

“The Prestige acquisition will complete geographical presence for Blackstone as it was looking to expand in the South. The focus of the firm is to complete the transaction and make a smooth transition over the next 12-18 months,” a person cited above said.

The private equity major is eyeing opportunities in both metro and non-metro cities to support the next level of growth in retail portfolio. “There will be new opportunities in metros and their peripheries too, and tier II towns. We are currently building the brand equity as this is the opportunity to gain customer confidence, especially when the industry saw almost zero sales in June to a 70-80% recovery now,'' said Dalip Sehgal, CEO, Nexus Malls.

However, he refused to comment on the deal.

Blackstone’s current portfolio of retail assets include 1.15-million-sq-ft Elante Mall in Chandigarh, the 1-million-sq-ft Seawoods Grand Central Mall in Navi Mumbai and two assets each in the cities of Indore and Pune.

In November 2015, it had also acquired two malls in Amritsar and Ahmedabad from Alpha G Corp.

The firm's current annual sales from existing retail assets tots up to around Rs 3,000 crore.

“Over the past nine months, we have focused on upgrading and balancing retail assets, investing in marketing to gain customer confidence and building employee confidence through no retrenchments and salary cuts,” Sehgal said.

Blackstone is currently in the final legs of closing an income-generating asset deal with Prestige Group for $1.2 bn that will see the private equity major acquire over 21 million sq ft across completed and under-construction office projects and retail malls, including two hotels.

Blackstone has assets under management of $50 bn in India.

With $8 billion real estate investments, the firm has invested $6 billion in office real estate assets—118 msft across 45 assets in 6 cities—while $2 billion has gone toward non-office real estate assets.