Global e-commerce giant Amazon looks all set to acquire a minority stake of 10% in Kishore Biyani-owned Future Retail, that operates Big Bazaar, Foodhall, and HyperCity.
If reports are to be believed, the deal is expected to be approved by Future Retail’s board on October 29. The deal is expected to value Future Retail at around ₹25,000 crore in the market.
The reports further suggest that Amazon is looking to ramp up ownership holding and business exclusivity rights. The e-commerce giant is expected to pick up shares through the foreign portfolio investors route, paying a hefty premium to the prevailing share price.
The reports have not been confirmed by either Amazon of Future Retail.
If the deal goes through, Amazon will have access to Future Retail’s vast network of over 800 stores, covering 12 million square feet of retail spaces, in more than 250 cities, serving more than 500 million customers every year.
With the e-commerce industry already rife with competition, now Amazon is aggressively exploring the offline retail industry in India. After the acquisition of Flipkart by the global retail behemoth Walmart, in a mammoth deal worth $16 billion, Amazon has been looking to expand its business in India through omnichannel modes.
Earlier this month, it was reported that Amazon and Alibaba were in talks to acquire a stake in Spencer’s Retail.
Last month, Amazon and Samara Capital-owned Witzig Advisory Services, acquired Aditya Birla Group’s food and grocery retail chain ‘More’, in a deal speculated to be worth around ₹4,200 crores.
While Amazon is aggressively expanding its offline presence in the growing Indian retail industry, its rival Flipkart is expected to leverage the expertise and a vast network of its new partner US-based retailer Walmart.
In August 2018, Flipkart launched its online grocery store called Flipkart Supermart, to expand into the grocery segment.
Apart from Flipkart, another Indian giant Paytm Mall, an e-commerce arm of a digital payments company Paytm, is venturing into the retail segment. Earlier this month, it was reported that Paytm Mall is working with FMCG brands to drive sales through the O2O model.
According to an IBEF report, the Indian retail industry is expected to increase by 60% from $680 billion in 2017, to touch $1.2 trillion by 2020. It is no surprise that Indian e-commerce giants are exploring an omnichannel strategy to gain a greater market share of this rapidly growing industry.