Reliance Industries Ltd. has announced that it has reached a deal to procure the retail, logistics, and warehousing arms of India's Future Group for $3.4 billion, a transaction expected to boost Mukesh Ambani's vision to be the premier retail group in the country.
Reliance, owned by Asia's wealthiest person Mukesh Ambani, is aiming to solidify its foothold in India's immensely competitive e-commerce market as it faces fierce competition with US tech giant Amazon and Walmart-supported Flipkart for a slice of the country's very important online market. The Indian conglomerate set up JioMart, its digital platform, last May. Ambani also considers listing Reliance's digital and retail arms in the next five years.
In a statement Saturday, Reliance Retail Ventures disclosed that Future Group will consolidate a good portion of its other businesses into Future Enterprises Ltd. Ambani's division will then pour out around 12 billion rupees to buy more than 6 percent ownership in Future Enterprises, the statement said.
According to analysts, the acquisition disclosure is seen to complicate the money-making venture of Amazon and Flipkart in India, whose retail sector is projected to grow to $1.3 trillion by 2025, rising from $700 billion in 2019, consultancy group BCG and the Retailers' Association India noted.
Before the coronavirus pandemic, Technopak anticipated the size of India's retail market to it the $825 billion level, of which roughly $85 billion was modern retail. The Reliance-Future Group partnership will produce more than a quarter of this figure in one corporate entity, Arvind Singhal, CMD of retail research group Technopak said.
Like several other owners of store chains, Future Group's operations have been heavily impacted by a slumping economy and the ill effects of the ongoing global health crisis. Cash-capable Reliance has recently produced fresh funding valued at nearly $20 billion from investors like Facebook and Google, while the company braces to enter India's highly-stacked retail market.
Future Group owns a number of India's most popular supermarket brands, including Big Bazaar but the group's founder Kishore Biyani, once referred to as the country's retail king, has had some financial troubles lately, with the pandemic dragging down his businesses.
Future Group serves millions of consumers through over 1,500 retail shops in more than 400 locations. Its new agreement with Reliance will help Future Retail trim down its debt. Reliance owns and operates more than 620 Reliance Fresh supermarket branches, 670 fashion outlets under the Reliance Trends brand, on top of over 50 cash-and-carry shops under the Reliance Market brand.
