Phoenix Mills to raise Rs 1,200 cr via qualified institutional placement

Phoenix Mills, one of the biggest mall developers in the country, is looking to float a qualified institutional placement (QIP) of the company’s shares to raise funds soon, said sources in the know.

This will be the first QIP by any real estate developer after Godrej Properties came out with one in June last year and raised Rs 2,100 crore.

Currently, Phoenix is conducting roadshows with investors via video and audio calls, informed sources.

The company’s board has already taken an enabling resolution from shareholders to raise as much as Rs 1,200 crore.

“They have cash of around Rs 750 crore on the books. This is enough to meet its needs for the next nine to 12 months. The new funds raised through QIP will meet any good acquisition opportunity,” said sources.

An email sent to the company’s spokesperson did not elicit a response till the time of going to press.

The company has appointed CLSA, UBS, HSBC, and Kotak Mahindra Capital Company as bankers for the issue.

The company does not have plans to launch any new malls this financial year. It has plans to open new malls in 2021-22 (FY22).

The company has eight malls with a total area of 6 million square feet in Bengaluru and Mumbai.  

While the company’s malls are operational, the company’s Managing Director Shishir Shrivastava said last month he expects normalcy in business operations to return in FY22.

“We hope FY22 will see normalcy, and bring us back to the levels of 2018-19, if not 2019-20 (FY20),” said Shrivastava, in a conference call earlier this month.

He also said the company is preparing a war chest to fund probable acquisitions.

Phoenix Mills has reached an agreement to waive 50 per cent rent during the lockdown period with 75-80 per cent retailers (except for multiplexes). Further, once malls reopen after lockdown, the company said it would consider a waiver of 30 per cent on a minimum guarantee for three to six months’ rent.

With the pandemic likely to linger till at least the second quarter of 2020-21, or FY21 (July-September 2020), in a worst-case scenario, the company stands to lose 40-50 per cent of its FY21 revenue, said Adhidev Chattopadhyay of ICICI Securities, in a recent report.

“We have assumed that Phoenix will lose Rs 400 crore or 40 per cent of the FY20 rental income in FY21 (on a like-for-like basis) owing to Covid-19, and expect FY22 rental income to recover to the FY20 levels of Rs 1,000 crore. We expect Phoenix to now see 35 per cent year-on-year decline in rental income to Rs 660 crore in FY21 (adjusted for marginal revenue from the new Lucknow mall),” said Chattopadhyay.