The founder of Future Group Kishore Biyani was recently reported negotiating a wider set of agreements with Amazon. According to reports, this agreement will provide Amazon, the largest retailer online, a chance to buy out this Indian company in the future. Currently, both these parties are calling for a draft to put up options in respective shares for a proper agreement allowing Amazon to purchase Biyani’s stake in FRL (Future Retail Limited).
This agreement shall be initiated about 8 to 10 years later depending on the Indian laws. The FRL currently operates a string of grocery and food stores like Nilgiris, Easy Day, and Big Bazaar. Amazon and Biyani are currently close to striking their first part of the agreement. According to this agreement, this retailer, headquartered at Seattle will buy about 9.5 percent of the stakes under Biyani in FRL. This purchase will be commenced via FPI, also known as Foreign Portfolio Investor route. The announcement for this agreement got delayed which is now expected to commence in the month of December.
However, both Amazon spokesperson and Biyani said that they won’t comment over rumors and speculations. As promoters, Future Group founder Biyani and the family currently owns about 46.51 percent of this company. From this stake, about 40.3 percent is pledged which was confirmed by the filings completed in September 2018.
An individual familiar with these discussions stated that 9.5 percent of the total stake shall be pitched into Amazon via FRL. However; the thing crucial for this online giant is taking over this India based company in the future. Currently, the company comes at the net profit of INR 175.10 crore for the financial year 2018. Future Group has a total of 1,123 stores across the stretch of 355 cities. Now, this deal with Amazon would help with the creation of exclusively digital storefronts meant for the Future Lifestyle brands to be listed online.
Recently, Amazon acquired about 5 percent shares in the fashion chain Shoppers Stop just last year. Not just that, the company brought under its umbrella, the Samara Capital and More, the supermarket chain. More was previously under the ownership of Aditya Birla Group. If reports are to be believed, Amazon is also discussing a possibility to purchase a stake within Spencer’s Retail which is currently owned by Sanjiv Goenka.
On the other hand, Amazon’s American rival, Walmart, opted for a whole new direction to rank way above Amazon by acquiring the popular e-commerce company Flipkart.