Pantaloon Retail, the country’s largest retailer, is close to sealing an equity partnership deal between one of its subsidiaries and French retail giant Carrefour.
Under the deal, being given finishing touches, Carrefour is expected to take an equity stake in Future Fashion Merchandise, a company created recently after restructuring the group’s retail business.
This is being done as foreign direct investment is banned in multi-brand retail, though companies with Indian management are allowed to bring in foreign funds in individual subsidiaries.
Kishore Biyani, chairman of Future Group which owns Pantaloon Retail, said the company “has not concluded any deal with Carrefour as yet. I can’t comment on possibilities.”
A Carrefour spokesperson said “We are in talks with companies but have not signed the deal finally.”
Carrefour had last month announced plans to go it alone on setting up cash-and-carry wholesale stores in the country in the first quarter of next year. Metro AG and Wal-Mart are already present in this segment.
Carrefour is a strong player in the hypermarket segment in over 30 countries, with over half its annual revenues coming from this area. Sources said the company may also look for a back-end support tie-up, as Bharti and Wal-Mart did.
Carrefour and Future Group were in talks even about a year earlier but nothing was finalised due to the FDI limitations. With a new government at the Centre, the FDI norms are expected to change and this has prompted the two companies to renegotiate, sources said.
Pantaloon Retail had received shareholders’ approval for restructuring the company into three separate entities catering to FMCG, retail and fashion, and rechristening the group as Future Markets & Consumer Group.
The firm’s fashion division, including the entire investment in Home Solutions (Retail) India, is being sold to its wholly owned subsidiary, Future Value Retail and its retail division to subsidiary Future Speciality Retail.
Earlier in January, Pantaloon had said it will hive off four business units, including Big Bazaar and Food Bazaar, into independent subsidiaries.