Google is reportedly in talks with Paytm Mall to purchase a 7-10% stake in Future Retail worth Rs 3,500-4,000 crore, reports Economic Times. This consortium would enable them to take on Amazon’s grocery offerings in India. For the Future group, the fund infusion would be through both primary and secondary share sale, which could result in dilution of the stock held by existing shareholders. The valuation of the deal would be based on Future Group’s claims that it has a footfall of over 500 million customers each year, the report said.
Future Retail has around 1,035 stores across 250 cities including hypermarket brand Big Bazaar, grocery chain Easyday, and electronics store Ezone, among others in India.
While Google, Alibaba and Paytm did not respond to MediaNama’s query’s on the matter, spokespersons of both, Future group and Amazon India said that they will not comment on market speculation.
Major players interested in Future Retail
Amazingly enough, this comes after reports suggested that Amazon, Alibaba and Walmart were all also in talks with the Kishore Biyani led company to buy a stake of a similar size. While some reports indicated that Amazon tied up with Chinese conglomerate Alibaba to buy a stake in the company earlier this year, others suggested that all four companies were also interested in buying individual stakes. According to the report by ET, Future Group founder and CEO Kishore Biyani had even met Jeff Bezos in the US and Alibaba officials in China to raise money.
Preparing for the battle in retail
Speculation has been rife about a major investor coming in ever since Walmart acquired a 77% stake in Flipkart for $16 billion, following which, Biyani told ET that, “I will sell a minority stake to the strongest global retailer.”
Given the combined financial might of these entities, coupled with the threat posed by new players in the segment like Reliance, Biyani was keen on raising funds and building strategic partnerships to ensure Future Group’s profitability. “Ultimately, it’s all about how formidable we all are. As players get bigger, you need alliances,” Biyani told ET.
On the other hand, Future Retail represents the perfect opportunity for global companies looking to enter the retail segment in India given the massive presence of the company across the country and the FDI (Foreign Direct Investment) norms on multi-brand retail.
This strategy seems to be in sync with its long term plan, dubbed, Retail 3.0, which will integrate the company’s digital presence with mortar retail to help generate a trillion dollars in revenue by 2047. In this plan, the company intends to open a retail store every 2 km while using a high level of personalisation and analytical technologies.
Amazon’s grocery and India bet
Earlier this month, Amazon Inc pumped a new round of Rs 2700 crore in Amazon India (Amazon Seller Services Pvt. Ltd), literally 4 months after raising the exact same amount. It also invested Rs 100 crore in its food retail business (Amazon Retail India Pvt. Ltd), a top up to the Rs 10.5 crore it invested in June.