Blackstone emerges as front-runner to buy South City Mall in Kolkata

US-based private equity investor Blackstone has emerged as the front-runner to buy South City Mall, one of the largest malls in eastern India, said sources in the know. A dozen investors, including Blackstone, Xander, and GIC, have put in bids for the mall, measuring about 1 million square feet (sq ft), the sources said, adding that the deal is expected to be around Rs 2,000 crore. 

If the deal goes through, it will be one of the biggest mall deals in the past five years. In 2017, Blackstone bought Elante mall in Chandigarh from the Carnival group for Rs 2,200 crore, the largest such deal in recent years.

Some of the current owners, including the Emami group, Surekha Group, Merlin Group, Shrachi group, Rameswara group, and JB group, want to exit the mall they set up in 2008, said the sources.

Blackstone and its mall company did not comment on the matter. A mail sent to Xander did not elicit any response. GIC could not be contacted for comments. The Emami group also declined to comment on the story.

“We are doing the valuation for South City Mall. At this stage, it is too early to comment on the matter,” said Pradeep Sureka, promoter, Sureka Group. “There are no plans for a stake sale. South City Mall is one of our prized projects,” said Sushil Mohta, MD, Merlin Group. The mall underwent a massive revamp in the past two years and saw the entry of global brands such as Starbucks and Harley Davidson. The average monthly footfall at the mall is around 2 million, among the highest in the region.

The mall had many firsts to its credit. It was the first mall in the country with a multi-level roof top car park facility, with a capacity of 1,500 cars. It was also the first mall (when launched) with six movie screens (Inox cinemas). It also had the largest food court, spread over 40,000 sq ft with a seating capacity of 850 people.

Global investors have bet big on malls in the country due to fixed rental income and low risk involved. Total inflows in the retail real estate sector in 2019 were $970 million, the highest since 2015, real estate consultant Anarock said in a recent report. Of the PE investments of $5 billion in Indian real estate in 2019, retail comprised 19 per cent, it said. Blackstone-owned Nexus Malls, which started investing in 2016, has a portfolio of 5.4 million sq ft. It owns malls in Mumbai, Pune, Ahmedabad, Chandigarh, Indore, and Amritsar.

Singaporean sovereign fund GIC has bought stakes in Viviana mall and Runwal group’s malls in Mumbai. It has also partnered DLF to build malls. Virtous Retail South Asia (VRSA) in December last year bought malls in Nagpur and Amritsar from Tata Realty & Infrastructure for Rs 700 crore. The deal took its portfolio from 5.4 million sq ft to 7.1 million sq ft.

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