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Amazon, which has invested more than $ 6 billion in India's booming Internet market, has just invested a little more as it strives to expand its presence in the country's brick-and-mortar space, which generates a large part of sales in the country. The US e-commerce giant acquires 49% stake in Future Coupons, an entity of the group owned by the second largest Indian retail chain, Future Retail, said the latter in a regulatory filing Thursday night (local time) .
An Amazon spokesperson told TechCrunch that this investment "would enhance Amazon's existing investment portfolio in the payments landscape in India." The spokesman added: "Amazon has agreed to invest in Future Coupons Limited solutions such as corporate gift cards, loyalty cards and reward cards primarily aimed at businesses and customers. institutions. "
According to reports filed in the past, Future Coupons held approximately 7.3% of Future Retail's capital at the beginning of this year. This means that today's deal would give Amazon a 3.58% stake in Future Retail. The financial terms of the deal have not been revealed, although based on the current market capitalization of Future Retail – about $ 2.9 billion – a 3.58% stake in the company would cost about $ 104 million .
"In accordance with these agreements, Amazon has agreed to acquire an interest in Future Coupons Limited to acquire 49% of the shares, with or without voting rights. As part of this deal, Amazon has been awarded an option to purchase, "said Future Retail in a document (PDF) sent to the local stock exchange.
As part of this agreement, Amazon will have the right of first refusal to purchase more holdings in Future Retail, both directly and via entities.
"The Promoters have also accepted certain restrictions on the transfer of shares in their shares of the Company for the same mandate, including restrictions preventing the transfer of shares to designated persons, a right of first offer in favor of the Company. all of which are subject to mutually agreed exceptions (such as liquidity benefits and affiliate transfers) .The transaction contemplated above is subject to the receipt of applicable regulatory approvals and usual closing conditions, "added Future Retail.
Amazon has sought to acquire up to 10% stake in Future Retail, which operates more than 1,000 stores, including "Big Bazaar" stores, in 400 Indian cities. Bloomberg announced earlier this month that Future Retail was seeking a valuation of approximately $ 281 million for the sale of stakes in the company.
Future Retail covers a broad range of retail brands in India and covers a wide range of products ranging from grocery products to perishable goods through electronics and fashion clothing. On Thursday, Amazon India announced the launch of Amazon Fresh in parts of Bangalore. Amazon Fresh currently offers 5,000 types of items, including fresh fruits, vegetables and meat, as well as household and personal product category items.
According to previous press reports, the company is also in talks to acquire more than 25% stake in Reliance Retail, the largest retail chain in the country. Brick and mortar stores continue to generate a large portion of sales in the country. Amazon is also a shareholder in the Indian supermarket chain More and the Shopper's Stop chain of stores.
"Let's not forget that e-commerce accounts for only a very small share of total retail consumption in India, probably less than 3%," said Amit Agarwal, director of Amazon India, week.
Earlier this week, Amazon opened an office in Hyderabad that can accommodate more than 15,000 employees, making it the largest campus of the company in the world.
India has become the last battleground of the US giants Amazon and Walmart. Amazon India is competing with Flipkart, which currently occupies first place in the country's e-commerce market. Last year, Walmart acquired a controlling interest in Flipkart for $ 16 billion. Like Amazon, Flipkart has not concealed its intention to expand its business to the grocery store and other categories.
Amazon India and Flipkart both enjoyed great success in India earlier this year after the New Delhi government imposed some regulatory changes to the way e-commerce conducts business in the country. The changes have been largely structured to help local businesses.
Agarwal of Amazon India urged the government to ease regulatory pressures. "There are so many opportunities to let e-commerce thrive instead of trying to define every security barrier it should work under." I feel that e-commerce can really speed up the Indian economy considerably if it is only allowed to prosper, "he told Reuters.
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