Blackstone acquires stake in Forum Group’s retail space

The Blackstone Group has entered into a strategic partnership with Kolkata-based Forum Projects to invest in retail development in eastern India. The US private equity fund has just bought a substantial stake in Forum's Bhubaneswar project for a little less than Rs 300 crore, said two consultants familiar with the matter. Blackstone is believed to have bought 74% of the project’s mall portion, covering about 4.2 lakh sq ft of 'Forum Esplanade' at Rasulgarh square in the Odisha capital. This Rs 400-crore project of Forum includes malls and an office tower, and is spread over 10 lakh sq ft. It is expected to house around 150 entities from sectors like retail, food and entertainment. Forum Projects deputy managing director Vidyut Saraf confirmed the partnership, but refused to share deal details with ET. He, however, added: "going forward, the private equity player will cherry-pick commercial real estate projects developed by us in this part of the country for investment." The realtor has plans to develop malls in Jharkhand, Howrah in West Bengal as well as in the eastern fringes of Kolkata and is expecting to deliver about one million sq.ft. of retail space every year over the next three years.. The partnership is in line with the one that Blackstone has with the Embassy Group of Bengaluru and Pune-based Panchshil Realty. The two partners will look to build a platform through which they can collectively own six-seven shopping malls in eastern India over the next six-seven years. Subsequently, they plan to form a real estate investment trust and raise fund through its listing. Blackstone's investment will trigger interest in eastern India from other marquee private equity players and sovereign wealth funds who till now have restricted their investments to other regions, a real estate consultant said. "The move also signals that retail infrastructure in the East is gathering steam. This will also lead to the availability of more patient capital, and a lower cost of capital, for retail infrastructure in this part of the country,” said Shobhit Agarwal, ex-managing director for capital markets at JLL. There is quite a bit of consolidation taking place in the retail space right now, he said. "The GST regime and the relaxing of FDI norms have been welcome regulatory developments. Along with these, the technological integration of shopping malls with ecommerce is helping accelerate retailer access to consumers across the country. Further consolidation will take place in this space as large institutional investors start planning their REIT listings in India," he said.