Google is planning to join hands with Alibaba's investee company Paytm to form an association to infuse Rs 3,500-4,000 crore for a possible seven-10 per cent stake in Future Retail Ltd (FRL). It is a listed company of Kishore Biyani. The consortium is likely to compete against Amazon, the world's largest online retailer which has also submitted a similar proposal for a stake in FRL.
There were media reports in February that the Future Group is mulling the idea of an alliance with both Amazon and Alibaba. Kishore Biyani also said to have met Jeff Bezos, Chief Executive Officer of Amazon in the US and Alibaba officials in China.
The Future Group is looking for an additional capital infusion through a strategic partnership to streamline operations and increase profitability amid the deep-pocketed retailers is battling it hard to capture the booming Indian retail market. The digital economy is expected to touch $1 trillion by 2025 through consolidation.
The Economic Times reported that Kishore Biyani has expressed his plans to materialise a deal with a foreign investor in the upcoming months.
The fund infusion will be through both primary and secondary share sale, which could even witness a change in the shareholding pattern of the FSL. In the last six years, Biyani has taken over six supermarket store chains and acquired a total retail space of 13.6 million sq. ft, having a presence in 255 cities through over 1,030 stores.
The online and offline retail segment is witnessing a huge disruption with the entry of deep-pocketed foreign players in each other's territory. The US grocery sector received a shock with Amazon buying Whole Foods for a whopping $13.7 billion. Walmart also bought a 77 per cent stake in Flipkart with $16 billion.
In last five years, Amazon has invested an additional Rs 2,700 crore ($386 million) in its Indian unit, bringing its total investment to approx. $4 billion. Bezos has committed at least $ 5 billion dollars and an additional $500 million to build its food retail business in India.