New Shop looks to raise $25 million to accelerate store expansion

New Delhi-headquartered convenience store chain New Shop, which recently acquired its rival Godfrey Phillips India (GPI)-controlled 24Seven, is raising $25 million in fresh funding after bringing on board South Korean investor Redwood Equity Partners in a previously undisclosed deal, people aware of the matter said.

 

New Shop recently agreed to acquire 24Seven stores as part of an asset transfer deal. Through franchising, five-year-old New Shop operates about 300 always-on stores in cities and towns outside the top metros. The network serves 5 million walk-in users monthly across 35 cities in 18 states. New Shop hopes to close the ongoing financial year with 500 stores, including those acquired from the deal with Godfrey Phillips.

 

Sources said that New Shop is seeking fresh capital to accelerate store expansion, including tuck-in acquisitions, and strengthen its B2B (business-to-business) tech platform. The new fundraising discussions are ongoing with US and West Asia investors, focused on global retail and consumption themes.

 

Redwood invested after stringing together capital from a few family offices in South Korea. It is well-connected to leading financial institutions, renowned family offices, and conglomerates in Korea, and manages capital for them. Redwood collectively invested in 65 companies — primarily in South Korea, Southeast Asia, and India — with an AUM (assets under management) of over $300 mn. It has invested in India for five years now, starting with Tata 1mg.

 

Anthill Ventures, Xander, and Good Game Ventures are among the existing shareholders in New Shop that Aastha Almast, Charak Almast and Mani Dev Gyawali founded in 2019.

 

When contacted, New Shop declined to comment and Redwood Equity Partners could not be reached immediately.

 

Redwood believes that it is a perfect time to invest in the convenience store business in India. The segment can expand if a country reaches $3,000-$4,000 per capita GDP (gross domestic product) in its economic growth evolution. India is approaching $3,000 per capita at present.

 

The convenience retail market is a significant part of the worldwide retail industry. It covers neighbourhood hangouts and mass transit locations, including railways and highways. New Shop has struck an MoU (memorandum of understanding) with Mittal Energy to open highway stores alongside fuel station rollouts.

 

It has also signed a deal with French technology conglomerate Metavisio Thomson earlier this year. New Shop will enable consumers across fast-urbanising hinterland markets to discover Thomson-branded electronics and digital gadgets in its stores through this deal. Through its rapidly expanding network, New Shop plans to partner with several brands across categories to help them crack the complex Tier-2 and Tier-3 Indian retail markets.

 

Its franchise owners benefit from the brand's support, tech-enabled seamless inventory management, omnichannel presence, and established customer base while contributing local insights that allow New Shop to adapt each store's inventory to regional preferences. This mutually beneficial model has fostered a strong network of franchisees who operate 24x7 stores.

 

South Korean and Japanese markets have been at the forefront of the convenience retail revolution, transforming a generation of mom-and-pop shops similar to Indian kiranas into modern retail outlets. The revolution is gaining momentum in India, with New Shop and Reliance Retail recently introducing 7-Eleven stores.

 

GPI got out of the business after it continued to make accumulated losses despite ending 2023-24 (FY24) with revenues of over ~403 crore.

 

New Shop’s game plan

 

Raises money from Korean PE fund, eyes more for expansion

 

Plans to expand its stores from 300 to 500 in the ongoing financial year

 

Ties up with Mittal Energy to open up outlets in fuel stations

 

Joins hands with Metavisio Thomson to sell electronics and digital products