Main
PE Inflows in Indian Retail Double to $1.2 bn in 2 Years – ANAROCK
Mumbai, 16 May 2019 – Further liberalization in FDI policies – 51% FDI in multi-brand retail and 100% FDI in single-brand retail under the automatic route (against the previous 49%) – has attracted major global PE funds to double their investments in the Indian retail sector. As per ANAROCK’s Private Equity in Indian Real Estate report, the total private equity inflows in the Indian retail sector between 2015-2018 stood at USD 1.84 bn. Of this, nearly USD 1.2 bn were pumped in between 2017-2018 alone.
US and Canada-based PE funds together invested more than USD 1.13 bn into the retail sector, bestowing their faith on an industry riding on increasing consumerism which is pegged to rise toUSD 3,600 bn by 2020.
Tier 2 & 3 cities were high on the radar of the PE investors, who in the last four years infused almost half of their total investments into the retail sector in cities like Amritsar, Ahmedabad, Bhubaneshwar, Chandigarh, Indore and Mohali.
Shobhit Agarwal, MD & CEO – ANAROCK Capital says, “Our report highlights the fact that unlike the commercial office sector, retail is to some extent geography-agnostic because its success depends on the spending power of its target audience. As a result, shopping malls in Tier 2 & 3 cities have performed as well as, if not better than, their Tier 1 counterparts. This also led to increase in rentals and profitability and caused PE investors to start considering investment options outside their accustomed Tier 1 geographies.”
US-based funds like Blackstone and Goldman Sachs invested more than USD 1 bn funds into the Indian retail sector between 2015 and 2018. Of this, more than USD 700 mnwent into Tier 2 & 3 cities; just USD 300 mn came to cities like Pune and MMR. Evidently, large PE funds have recognized the potential of smaller cities which continue to have a shortage of organized retail despite the rising disposable income and aspiration-driven consumption appetite being generated there.
PE investors from UAE, Singapore and Netherland also showed interest in Indian retail during the period and invested close to USD 800 mn into it.
Top 5 Retail PE Deals in Tier 2 & 3 Cities – 2015 – 2018
Investor | Investee | Deal Size in USDmn | Cities |
Blackstone | Carnival Group | 340 | Chandigarh |
Blackstone | Kalani Group | 190 | Indore |
Blackstone | Alpha G: Corp | 150 | Amritsar & Ahmedabad |
Xander (VRSA) & APG | Sun Apollo &Gumberg Retails | 110 | Mohali |
Blackstone | Forum Group | 40 | Bhubaneshwar |
Source: ANAROCK Research
Anuj Kejriwal, MD & CEO – ANAROCK Retail says, “The opportunity that the Indian retail sector holds in store for PE investors is more than evident – as are the geographies they must focus on for optimum returns. ANAROCK data reveals that around 39 mn sq. ft. of organized retail space is expected to enter the market between 2019-2022. Of this supply, approximately 71% is expected to come up in Tier I cities, and the remaining 29% in Tier 2 & 3 cities.”
“Ahmedabad, Bhubaneshwar, Ranchi, Kochi, Lucknow, Surat and Amritsar, among others, are the new retail growth hubs where the next chapter of the Indian retail story will play out in the coming years,” says Kejriwal. “In fact, global retailers are now also eyeing cities like Chandigarh, Lucknow and Jaipur, to name a few. There is every reason to expect increasing funding infusions into the retail sector of these cities in the future.”
-
News3 weeks ago
KW Delhi 6 Mall Onboards New Brands
-
News4 weeks ago
Manasum Senior Living Launches IKIGAI GOA, A Senior Living Community in North Goa, in collaboration with Prescon Homes
-
News2 weeks ago
Godrej Properties Sells Rs 3k cr+ Homes of Godrej Zenith, Gurugram, within 3 days
-
News4 weeks ago
Bridging India Divide: Top 5 Tier- 2 Cities to Focus On
-
News3 weeks ago
Commercial Realty Gets Tech Savvy: Fast Construction, Enhanced Convenience
-
News4 weeks ago
Multipoint Connection – A Definite Boon
-
News3 weeks ago
RBI’s Status Quo on Key Policy Rates to Help Maintain the Real Estate Growth Momentum, Say Industry Stalwarts
-
News1 week ago
Olive Announces Dhruv Kalro as Co-Founder