Virtuous Retail South Asia Pte. Ltd (VRSA), the retail development joint venture between alternative investment firm The Xander Group Inc. and Dutch pension fund APG, has acquired two existing malls and an upcoming retail development project for around $500 million, said Siddharth Yog, its founder and chairman.
“We see greater opportunity in difficult times. In the retail business, we are expanding significantly. We have made three more acquisitions—two existing malls and one new development," Yog said in an interview, adding that it was part of the company’s ongoing expansion plan for India.
With the latest acquisitions, Virtuous Retail will own and operate around 11 million sq.ft of retail space in India. “While one acquisition will mark the entry in one of the four metros, the two others are located in the 12 top cities in India."
Yog, however, declined to disclose further information on the transactions.
The Bengaluru-based firm operates four malls—Bengaluru, Surat, Mohali, and Chennai—besides two under-construction malls, one each in Delhi and Bengaluru, which are part of mixed-use developments.
“All together for these three acquisitions, the total investment would be around $500 million. This goes to show that its a good time to be investing," he said.
Virtuous Retail has been on an acquisition spree in the retail space over the past one year.
Mint had reported on 29 August 2018, that it was in talks with Mumbai-based Omkar Realtors and Developers Ltd to acquire an upcoming mall for ₹2,300 crore.
“There is opportunity for acquisition in the retail space, but it requires a lot of hard work as you need to have a lot of operating expertise on the ground. It is going to take a lot of capital and a lot of blood, sweat, and tears to make these opportunities perform the way they should."
Yog said the company is also expanding to other asset classes. “We have announced three co-working centres. We just opened one in Chennai. We are opening one each in Hyderabad and Pune," he added.
In 2016, Xander partnered with Dutch pension fund manager APG Asset Management NV to form a joint venture to acquire shopping malls for about $300 million. A year later, APG infused an additional $175 million ( ₹1,150 crore) of fresh equity into the platform.
The last two years have seen private equity firms and mall developers expanding their retail portfolio in tier II and III cities. According to a recent report by property consultants JLL, several retailers are making their entry in smaller cities and towns.
Funds like Blackstone have invested in successful malls in not only tier I but also in retail assets of tier II cities including Ahmedabad One mall, Elante mall in Chandigarh and Treasure Island mall of Indore, the report said.