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PE Inflows in Indian Retail Double in 2 Years

Private equity inflows in the Indian retail sector reached USD 1.84 billion during 2015-2018. Out of the USD 1.84 billion, USD 1.2 billion were invested during 2017-2018 alone.

PE (Private Equity) Investments in Indian retail sector showed robust growth in the last 2 years according to ANAROCK’s Private Equity in Indian Real Estate report. Private equity inflows in the Indian retail sector reached USD 1.84 billion during 2015-2018. Out of the USD 1.84 billion, USD 1.2 billion were invested during 2017-2018 alone. With government allowing 100% FDI in single brand retail through the automatic route compared to 49% earlier, more FDI investments are likely to come into the retail business which will attract more foreign PE investors over the next few years. 

US and Canada-based PE funds together invested more than USD 1.13 billion into the retail sector, riding the wave of growing consumerism which is set to rise to USD 3,600 billion by 2020.  

Almost half of the total investment in Tier II and III cities:

There was particular interest in Tier II and III cities from PE investors. In the last 4 years almost half of the total investments were into the retail sector in cities like Amritsar, Ahmedabad, Bhubaneshwar, Chandigarh, Indore and Mohali. 

Shobhit Agarwal, MD & CEO - ANAROCK Capital says, “Our report highlights the fact that unlike the commercial office sector, retail is to some extent geography-agnostic because its success depends on the spending power of its target audience. As a result, shopping malls in Tier II & III cities have performed as well as, if not better than, their Tier I counterparts. This also led to increase in rentals and profitability and caused PE investors to start considering investment options outside their accustomed Tier I geographies.”

Top 5 Retail PE Deals in Tier 2 & 3 Cities - 2015 - 2018

Investor

Investee

Deal Size in USD mn

Cities

Blackstone

Carnival Group

340

Chandigarh

Blackstone

Kalani Group

190

Indore

Blackstone

Alpha G: Corp

150

Amritsar & Ahmedabad

Xander (VRSA) & APG

Sun Apollo & Gumberg Retails

110

Mohali

Blackstone

Forum Group

40

Bhubaneshwar

Source: ANAROCK Research

Anuj Kejriwal, MD & CEO - ANAROCK Retail says, "The opportunity that the Indian retail sector holds in store for PE investors is more than evident - as are the geographies they must focus on for optimum returns. ANAROCK data reveals that around 39 million sq. ft. of organized retail space is expected to enter the market between 2019-2022. Of this supply, approximately 71% is expected to come up in Tier I cities, and the remaining 29% in Tier II & III cities." 

"Ahmedabad, Bhubaneshwar, Ranchi, Kochi, Lucknow, Surat and Amritsar, among others, are the new retail growth hubs where the next chapter of the Indian retail story will play out in the coming years," says Kejriwal. "In fact, global retailers are now also eyeing cities like Chandigarh, Lucknow and Jaipur, to name a few. There is every reason to expect increasing funding infusions into the retail sector of these cities in the future."




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ANAROCK retail private equity report

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