Entertainment World Developers (EWDPL) India, which builds malls in central India and partners property developer Phoenix Mills, plans to deploy $105 million (nearly Rs 450 crore) in developing multiple-use properties, including malls and hotels, in tier-II and tier-III cities across the country.
Recently, German realty fund MPC Synergy invested Rs 1,300 crore in various special purpose vehicles of EWDPL and Phoenix Mills, which are developing realty projects across the country. MPC Synergy picked up 16 per cent to 49 per cent in the respective SPVs.
Phoenix Mills holds 40 per cent stake in Indore-based EWDPL. According to the investment plan, EWDPL will spend nearly $85 million in six cities. Remaining $20 million will be used in EWDPL's proposed projects in Thiruvananthapuram and Nagpur, said Manish Kalani, managing director of EWDPL India.
Overall the projects will create nearly 25.49 million sq ft of retail and commercial properties and four malls are set to be operational in the financial year 2009.
"We consider investments in tier-II cities safer since the risk of falling rentals are very low compared to metros. Besides, we have the early mover advantage in these cities since we bought these lands at four times lesser than today's prices,'' said Kalani. The company will develop malls under the brand name of Treasure Island and Market City.
The company is planning to build 10 hotels on top of its malls, offering a total of 1500 rooms. The company is in advanced stages of discussion with Sarovar group for managing hotels, Kalani said. On its IPO plans, he said, "We will tap the market when the conditions improve and when we have five operational malls.”
The company plans to invest Rs 500 crore in the fit-outs alone. These hotels will be operational after 3-6 months from the opening of the malls in 2009, he added.
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Depending on the cities, the developer will build three, four and 5-star hotels. For instance, Udaipur will have a 5-star hotel and Nanded will have a three-star hotel.
For the equity fund raising, EWDPL will extend its partnership with Phoenix Mills and other private equity players, he said.
IPO plans
Though the company had plans to go public, the unfavourable market conditions made EWDPL defer its plans. "We will tap the market when the conditions improve and when we have five operational malls. We will be the first company to public with existing cash flows from five operational malls,'' he said. He hoped that by March 31, 2009, the company will reach its target.
When Phoneix Mills acquired up stake in EWDPL, the deal valued EWDPL at around Rs 1250 crore, now the company is valued over Rs 2,000 crore, Kalani said. "We will go public after our valuation reaches Rs 3,000 crore,'' he said.
Apart from Phoneix, ICICI Ventures holds convertible debentures which will give it a stake of 15 per cent after the conversion and the rest is owned by Kalani.
Phoenix Mills and its investee companies_EWDPL and north India-based Big Apple, have created a resource pool company Market City Management. While Phoenix focuses tier-I cities, other two develop properties in tier II and III cities.