Blackstone enters the Indian retail sector

October 14, 2016

Blackstone Group, world’s largest private equity manager has forayed into India’s retailing space by having set up Nexus malls, a full owned subsidiary. The company is looking at owning and managing shopping centres in the country with their main focus at extracting the full potential of the underperforming malls in Asia’s third largest economy.

On a global scale, the company owns more than 1000 malls across Asia Pacific, US and Europe. Having already acquired AlphaOne Malls in Ahmedabad and Amritsar which have a combined retailing space of about 1.3 million sqft, the company is looking at a number of deals to almost double their portfolio to 2.5 million sqft, by the end of this year.

Out of all the malls built on the Indian soil, hardly 10% have profitable operations. This has forced a number of developers to drop their plans of building any future malls, that too at such a crucial time when the international brands are accelerating their entry and expansion plans into the Indian market. As a result, an area of only 1.5 million sqft has been added in 2016 so far.

According to some sources, Nexus Malls’ main aim "is to overhaul the shopping patterns and behaviour of consumers" so as to address the issue of the underperformance of the current assets. Some news even suggest that Blackstone is willing to start deals outside of the big cities where most of the businesses of the similar kin have suffered despite having a huge amount of potential. About one third of the total shopping centres of the country are present in the tier II towns and cities.

The president of Reliance Brands, Darshan Mehta, said."Many Indian malls look tired. Mall business is not just about building the box but equally about constant tenant mixing and marketing excitement. While Blackstone is an influential investor, the challenge is in managing these public spaces that are visited by 10 or 12 million people annually."

October 14, 2016

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