SEBI Questions BSE’s Approval For Key Amalgamation Criteria In Reliance-Future Deal

The Securities and Exchange Board of India (SEBI) has asked the Bombay Stock Exchange (BSE) to clarify why it gave the go-ahead for the amalgamation of some of Future Group’s subsidiaries, a move which is central to the Future-Reliance Retail deal, which has been blocked by multiple regulatory hurdles.

The public markets regulator has pointed out complaints against Future Group firms on the regulator’s official grievances platform and questioned why the approval was given without clarifications on these complaints. 

The BSE had given a no-objection certificate (NOC) to Future Group on November 6, 2020, for the amalgamation of Future Consumer, Future Enterprises, Future Lifestyle Fashions, Future Retail, Future Supply Chain and Future Market Network. The companies had submitted a court-approved agreement along with their shareholders approving the amalgamation. 

The amalgamation is a key criterion for the INR 24,713 Cr deal between Future Group and Reliance Retail. According to a company filing with the stock exchanges, the transaction would only go through after the merger of key Future Group companies with Future Enterprises, which is absorbing the five other companies. 

SEBI pointed to four complaints registered on SEBI’s SCORES grievances platform against Future Group companies and the deal between Future and Reliance. “SEBI has sought clarification from the designated exchanges on these unresolved SCORES complaints. BSE will seek answers from the companies and send it to SEBI,” a person aware of the matter told Mint, which first reported the development. 

According to the report, Amazon has written two letters to SEBI, urging it and the stock exchanges to not issue NOCs, citing the verdict of the Singapore International Arbitration Centre (SIAC). 

Will Reliance-Future Deal Be Held Up Further? 

On November 20, the Delhi High Court reserved its order on Future Retail’s suit related to its deal with Reliance Retail. 

Last month, SIAC had stayed the Future-Reliance deal, in response to arbitration proceedings which had been initiated by Amazon. 

In October, Amazon had served a legal notice to Kishore Biyani-owned Future Group, over the latter’s alleged breach of a non-compete contract with the sale of its retail, wholesale, businesses to Reliance Retail in August this year.

Amazon, which had last year bought a 49% stake in Future Coupons, the promoter-entity of Future Retail, has contended that according to its contract with Future, the sale of the business to certain companies, including Reliance is barred.

In August, Reliance Retail had entered into a deal to acquire the retail, wholesale, logistics, and warehousing businesses of the Future Group for INR 24K Cr. Biyani’s Future Enterprises Ltd (FEL) retained the manufacturing and distribution of FMCG goods, integrated fashion sourcing and manufacturing businesses, its insurance joint venture with Generali, and a joint venture with NTC Mills.

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