Kishore Biyani's Future Retail prepares Rs 2,750-crore war chest

Kishore Biyani-led Future Group has no plans to slow down its ambitions for retail business despite talks with Amazon for a possible investment into the firm going into cold storage. On Monday, Future Retail announced that its board of directors had approved issue of non-convertible debentures for Rs 750 crore, coming at a time when the company posted a 13 per cent year on year increase in net sales and 10 per cent growth in net profit for the quarter ended December 2018.  

The company also said it was issuing warrants to promoters for shares of Rs 2,000 crore, taking the latter’s stake to 50.4 per cent from 46.5 per cent (as on December 31, 2018) on conversion. The equity infusion will happen at Rs 505 a unit, which is a premium of nearly 14 per cent over Monday’s close of Rs 444.60. The firm’s market capitalisation stood at Rs 22,403 crore, based on Monday’s close.

Amazon was looking to invest 10 per cent through an investment arm in Future Retail as a part of its larger plan to integrate its online operations with offline stores. The US major had picked up stakes in Shoppers Stop (5 per cent) and the More chain of supermarkets from the Aditya Birla Group, respectively. The More deal was done along with private equity firm Samara Capital, which acquired 51 per cent in the former through an investment arm. The balance (49 per cent) was picked up by Amazon. While Biyani has never officially indicated the status of his group's talks with Amazon, sources say that the deal has been postponed for now in the wake of the change in foreign direct investment guidelines announced in e-commerce at the end of 2018. 

The guidelines, which have come into effect since Friday, bars exclusive tie-ups between e-commerce firms that follow the ‘marketplace model’ and vendors using their platform. In a marketplace model, the e-tailers is not allowed to directly or indirectly influence the sale price of goods or services and is required to offer a level playing field to all vendors. Amazon, according to sources, has also put its investment plans on hold for the next few months in a bid to tide over the initial phase of implementation of the guidelines. 

The US-based firm has already pulled down products from Shoppers Stop on its platform and other sellers such as Cloudtail and Appario, which were partly owned by it.