Birla's More chain goes to Amazon, Samara
In a major boost for Amazon’s strategy to dominate the Indian retail space, the e-commerce company along with Samara Capital have signed a deal to buy out Aditya Birla Group’s food and grocery retail chain, More. The deal has valued More at Rs 4,200 crore.
Samara Alternative Investment Fund (AIF) has picked up 51 per cent stake in the company while the remaining stake has been bought over by Amazon, sources told Financial Chronicle.
A deal in this regard has been signed by the three entities and it will now go to the Competition Commission of India, which will also look into the legality of FDI in a multi-brand retail company. According to sources, Samara AIF is managed by Indians and is considered as a domestic fund. However, Amazon’s stake purchase will still be a matter to be studied. Industry insiders also find that an investment in the back-end company of More will not be subjected to FDI regulations.
Aditya Birla Retail’s (ABRL) More has 570 stores and is the fourth largest food and grocery chain after Big Bazaar, Reliance Retail and DMart. It clocked revenues of Rs 4,400 crore in 2017-18, registering a growth of 5 per cent. Last year, it brought down its debt to Rs 4,000 crore from Rs 6,500 crore and losses from to Rs 490 crore from Rs 644 crore. But the retail chain narrowly missed its target to become Ebitda positive last year. Finance costs have been restricting the company from becoming Ebitda positive and making further investments towards growing the chain. With the deal, More will get a relief from the debt.
The debt got into the books of More after it took over south-based retail chain Trinetra, Fabmall and Jubilant’s Total Super Store. Nearly two months ago, Aditya Birla Group chairman Kumar Mangalam Birla and his family converted bonds of around Rs 2,800 crore into equity in the group’s food and grocery business.
As for Amazon, this is second stake purchase in the offline retail space after buying 5 per cent stake in Shoppers Stop. The company has been planning to build its omni-channel network more aggressively after the Walmart-Flipkart deal. Amazon had committed $5 billion investment in the Indian market and of this more than $3.5 billion has already been spent.
According to sources, Pranab Barua, who heads the retail and apparel vertical of the Aditya Birla Group, may head the operations of the entity. But, there could be a change in management going ahead.
In a BSE filing, RKN Retail Pvt Ltd, a part of the Aditya Birla group, said it along with Kanishtha Finance and Investment Pvt Ltd and ABRL, has entered into a share purchase agreement (SPA) with Witzig, to sell their combined stake of around 99.99 in ABRL.
RKN Retail said its board of directors at a meeting held Wednesday approved the sale of its entire 62.19 per cent stake in ABRL to Witzig.
Subsequently, the company jointly with Kanishtha Finance and Investment Pvt Ltd and ABRL, entered into a SPA with Witzig, to sell their combined stake aggregating to 99.99 per cent in ABRL.
ABRL, part of $44.3-billion Aditya Birla Group, operates two different store formats--Supermarket and Hypermarket under the brand 'More'.
ABRL had ventured into food and grocery retail sectors in 2007 with the acquisition of Trinethra Super Retail and subsequently expanded its presence across the country.
