Partners Group, Kedaara Capital to acquire Vishal Mega Mart from TPG

By Debjyoti Roy

  • 21 May 2018
Credit: Bhakti Nair/VCCircle

Global investment firm Partners Group and private equity firm Kedaara Capital have agreed to acquire Gurugram-based Vishal Mega Mart Pvt. Ltd from private equity firm TPG.

While the deal value has not yet been disclosed, multiple media reports had earlier pegged the valuation at around Rs 5,000 crore. The transaction is subject to regulatory approval and is likely to close later this year, according to a press statement.

Vishal Mega Mart is the franchisor of the eponymous brand and wholesale supplier to more than 230 hypermarket stores across India, which are operated by a network of franchisees.

“We believe we have found the ideal partners for this ambitious next phase in Partners Group and Kedaara Capital and expect to benefit from their combined track records of working with fast-growing consumer businesses, including their prior collaboration on Aavas Financiers, which services the same underserved client group in India,” said Vishal Mega Mart chief executive officer Gunender Kapur.

Vishal-branded hypermarkets target the value-focused customer segment. More than 60% of Vishal-branded franchised hypermarkets are in small towns that have a population of less than 1 million.

“Having followed Gunender's success over the last several years, we are excited that he has chosen to partner with Partners Group and Kedaara for the next stage of VMM's journey,” said Manas Tandon, managing director-private equity Asia at Partners Group.

Vishal Retail, whose fortunes began to dwindle in the aftermath of the global financial crisis of 2008-09, had sold its retail, franchise and wholesale businesses in September 2010 to Chennai-based Shriram Group and TPG for Rs 70 crore. The fire sale took place just three years after the firm was listed on the bourses.

After the acquisition, the company was divided into two parts. While TPG Wholesale Pvt. Ltd took control of the wholesale and franchise arm, Airplaza Retail took over the retail arm.

Airplaza Retail is owned by Shriram Distribution Services Pvt. Ltd. TPG Wholesale was later renamed Vishal Mega Mart Pvt. Ltd

Vishal Mega Mart had recorded consolidated net sales of Rs 1,346 crore in the financial year 2015-16 with losses of Rs 39.8 crore for the same period. Its debt stood at over Rs 407 crore as on 31 March 2016.

A CRISIL report of February 2017 stated that the TPG-owned Vishal Mega Mart had modest operating efficiencies, marked by weak profitability.

“The current scale of operations does not generate adequate profits to sufficiently cover Vishal Mega Mart Pvt. Ltd’s high overheads, and the goodwill amortisation charge (on the acquisition of Vishal Retail Ltd),” it said.

Brick-and-mortar retail deals

VCCircle recently reported that Mumbai-listed value retail chain V-Mart Retail Ltd was in advanced talks to acquire West Bengal-based Baazar Retail Ltd, which operates under the brand name Baazar Kolkata.

Nysaa Retail, another company in the value retail category, secured funding from private equity firm Carpediem Advisors Pvt. Ltd in January.

Delhi-based V2 Retail Ltd, formerly Vishal Retail Ltd, had raised Rs 76 crore ($12 million) from Lighthouse Advisors India Pvt. Ltd, an India-focused mid-market private equity firm, in October last year.

In the broader retail space, Kishore Biyani-led Future Retail Ltd has been on acquisition spree in recent years.

Last October, the retail giant acquired K Raheja Corp group company Hypercity Retail (India) Ltd for Rs 655 crore ($100 million) in a cash-and-stock deal.

In November 2016, Future Retail acquired the retail and allied businesses of Hyderabad-based Heritage Foods Ltd. It had earlier acquired Big Apple, Nilgiris and Bharti Retail.

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