Cash-strapped Kishore Biyani is offering to sell a significant stake in Future Retail to Amazon to pare debt levels.
Future Group is considering to demerge the food business of Future Retail into a separate entity to make it compliant with India’s foreign direct investment norms, persons aware of the developments told The Economic Times.
India allows 100% overseas capital in retail entities that deal only in locally sourced and packaged food items. Currently food accounts for more than half the sales of Big Bazaar hypermarkets
In 2016, Biyani got in talks with Aditya Birla Retail to buy ‘More’, their chain of supermarket stores. However, last year, Amazon along with PE firm Samara Capital bought the chain of More supermarkets from the Aditya Birla Group.
One person said that the Amazon deal could be similar to the More buyout.
Last year, Amazon had purchased a 49% stake in Biyani’s Future Coupons, which owns 7.3% of Future Retail, with an option to buy the entire holding at a later stage. That deal gave Amazon roughly 3.6% in India’s largest listed retail entity Future Retail.
Separately, the Future Group has also launched preliminary talks with a clutch of strategic and private equity investors including Hero FinCorp, Kotak Mahindra Bank, and True North to sell its stake in Future Generali India Insurance, its general insurance joint venture with Italy’s Generali Group, people familiar with the matter told Moneycontrol.
Future Group expects to raise up to $350 million (around Rs 2,660 crore at current exchange rate) through the deal, one of the persons mentioned above said.