Amazon plans to acquire 8-10% stake in Kishor Biyani led Future Retail

Amazon will be able to buy more shares from Future Retail Ltd. if this deal is finalized. American e-commerce organization Amazon.com Inc. is in advanced stage talks to acquire as much as 10% of Future Retail Ltd. The deal between these two giants is expected to close in the next few weeks, sources close to the development revealed.

The deal, if succeeded will help Amazon further strengthen its place in the Indian market where it already operates an e-commerce market. The discussions between the two companies have been going on for a few months. However, the talks seemed to have been delayed after the Indian government tightened FDI rules for e-commerce marketplaces earlier this year.

As per the new rules and regulations, it protects the online markets with foreign investments from selling products of the companies in which they are stakeholders, and prohibit exclusive marketing arrangements. Apart from this, the inventory of a vendor will be seen as controlled by the marketplace if over 25 per cent of the vendor’s purchases are from the marketplace entity, including the latter’s wholesale unit.

The discussions continued a few weeks ago and the final negotiations are now taking place. Amazon already has stake in ‘Shoppers Stop’ and ‘More’. Future Retail would be Amazon’s third investment in the Indian brick-and-mortar retail ecosystem. In 2017, retail major Shoppers Stop had announced raising Rs 179.26 crore from Amazon.com Investment Holdings LLC through an issue of equity shares, which translated to just over 5 per cent shareholding for the American company.

However, a deal with Future Retail will also help Amazon compete more aggressively against Walmart-backed Flipkart as well as Mukesh Ambani’s proposed e-commerce venture. For Future Retail Ltd., the transaction could prove quite helpful as it will give the brick-and-mortar chain access to funds as well as to strengthen its own online presence.

Future Retail controls about a third of the country’s organised food and grocery market through the Big Bazaar and Nilgiris supermarket chains. More than 90% of all retail sales in India are accounted by physical stores.

Aaj per the reports in NBB, founder Kishore Biyani said that Future Groups plans to open about 10,000 small stores as part of the strategy of growing revenues from smaller format stores more than ten times, to Rs 60,000 crore, from about Rs 5,000 crore at present.

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