Kishore Biyani, the Founder and CEO of the Future Group, more popular through the Big Bazaar stores could be cashing in on the vast offline presence he has created. He is likely to offload part of his stake in the company through the FPI route to a consortium that could include Google Inc and Alibaba of China.
The result could be an omnichannel arrangement of offline-online business that can turnout to be a formidable challenge to the current leaders, Amazon and Walmart-Flipkart. The stake changing hands could be to the tune of 7-10% and in terms of value anywhere between Rs 3,500 crore to Rs 4,000 crore.
While these reports claim Biyani has already had meetings with the Amazon boss in the US (Amazon was keen to take a position in the Future Group) and Alibaba in China, none of the parties have given out any official confirmation of the development. Biyani had, in an interview sometime back made it obvious that he was in talks with foreign investors in order to induct funds into the business.
With a customer base of nearly half a billion, Biyani could be sitting across the table in a position of strength. His concerns would be to not miss the bus when the online retailing is gathering momentum in the country. And while many pure online players are eyeing an offline foray, his offline strength could be conveniently married to an online player resulting in a win-win situation for both.
Biyani has plans to streamline the operations of his supermarket chain and make it more profitable and the funds to be raised through this strategic investment route would be useful for carrying out these efforts.
For the record, the Future Group operates 1,030 stores in 255 cities across India and occupies a space of 13.6 million square feet. The deal being worked out may involve Google and Alibaba, through Paytm acquiring primary and secondary shares as well. Keeping in mind the Indian laws on foreign investment in the retail business the parties seem to have felt this is the best option available.
Google is already present in India in a small way with its Google Express and its plans to pick up 5% stake in Flipkart during the Walmart takeover got thwarted. Future Group may be the next best choice the company has. Its working on multiple ways to remain relevant in the online retailing space. Google has an eye on the hyperlocal engagement with the customers as well.
This also comes at a time when Reliance is expected to join the fun linking its offline presence in different categories with the Reliance Jio network it has created in a very short time.