The Canada Pension Plan Investment Board (CPPIB) will invest as much as Rs. 1,600 crore ($250 million) in Island Star Mall Developers Pvt. Ltd, a unit of real estate developer Phoenix Mills. The pension fund said that it would invest the amount in multiple tranches, starting with a commitment of approximately Rs. 724 crore. CPPIB will at full investment own 49% of Island Star Mall.
The CPPIB funds, the company said, will be used for developing new properties on land banks, and on existing assets like the Bangalore mall Phoenix MarketCity, which Island Star owns.
For CPPIB, India makes sense as an investment destination. Canada has an aging demographic, with the median age at 40 years. In contrast India's median age is 28 years, a very young population that is helping drive rapid economic growth, promising strong long-term returns for international investors. CPPIB's previous commitments in India amount to US$ 3.7 billion. It has previously invested with Larsen & Toubro and Kotak Mahindra Bank - in December 2014, CPPIB had announced a commitment of Rs 2,000 crore in L&T’s infrastructure subsidiary L&T Infrastructure Development Projects. The fund also owns around 6.3% stake in Kotak Mahindra Bank.
Share price for Phoenix Mills has been trending up since April 1, and grew bullish on the news.