Ecommerce giant Amazon is acquiring 49% stake in Kishore Biyani’s Future Coupons, the promoter entity of India’s second-largest retail chain Future Retail.
Future Coupons owned 7.3% shares in the publicly-listed Future Retail, and through this transaction, Amazon has also managed to acquire around a 3.58% stake in Future Group. The financial details of the deal were not disclosed. However, based on Future Retail’s current market value of $2.9 Bn, a 3.58% stake would have cost Amazon around $104 Mn.
Overall, the deal is speculated to be between INR 1500 Cr and INR 2000 Cr, according to a report in Business Standard, which got that range from unnamed sources. It must be noted that neither Amazon or Future Coupons or Future Group has confirmed the size of the deal.
“We have been informed by Kishore Biyani on behalf of the existing shareholders forming part of the promoter group and Future Coupons Limited (promoters) that they have entered into a share subscription agreement and a shareholders’ agreement with Amazon.com NV Investment Holdings LLC (Amazon),” Future Retail said in a BSE filing on Thursday (Aug 22) evening.
As a part of the agreement, Amazon has also been granted a “call” option. This will allow Amazon to acquire all or part of the promoter’s shareholdings in the company. The option can be exercised by Amazon between within a bracket of 3-10 years, in certain circumstances. Future Coupons has also agreed to certain restrictions on share transfers for the same tenure.
Future Retail has more than 1500 stores, including Big Bazaar, across 437 Indian cities and towns. The tie up between the two will enhance “Amazon’s existing portfolio of investments in the payments landscape in India,” an official press statement from the ecommerce giant said.
“Amazon has agreed to invest in Future Coupons Limited, which is engaged in developing innovative value-added payment products and solutions such as corporate gift cards, loyalty cards, and reward cards primarily for corporate and institutional customers,” the company added.