Google, Paytm Mall To Team Up For Future Retail Stake
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Internet leader Google is all set to collaborate with Alibaba-backed Paytm Mall to invest about Rs3,500–4,000cr for a 7–10% stake in Kishore Biyani’s flagship company Future Retail, according to an ET report. Future Group’s boss has been on the prowl to raise funds through strategic partnerships to restructure and modernize operations and improve profitability. This is mainly to combat intense competition with super-rich online and offline retailers such as Reliance Retail, Amazon, Walmart, etc, who are taking full advantage of the country’s galloping growth and young demography. Apparently, the Google-Paytm consortium will face stiff competition from the world’s largest online retailer Amazon. The high-flying Biyani has held meetings with Amazon’s Jeff Bezos in the US and Alibaba officials in China. Further, he plans to close the deal with a foreign investor in the next 2 months. This transaction is expected to value Future Retail at Rs30,000-Rs32,000cr vs. current valuation of ~Rs26,000cr. However, new capital infusion is expected to result in the dilution of earnings for the shareholders. This would aid the company in establishing omni channel facilities across the country. Further, company may utiliise the proceeds in increasing its discount offerings to gain market share. The company is also expanding its network rapidly. The company has added 6 FBB stores and 83 Easyday stores during Q1FY19, taking the total count to 67 and 749 stores respectively. Further, the store count of Big Bazaar stood at 285 stores in Q1FY19.
Recently, reports mentioned that Alibaba is also in talks to invest US$5bn with Reliance’s retail arm in Indian e commerce space. Future Retail Ltd ended at Rs517.60 down by Rs2.1 or 0.4% from its previous closing of Rs519.70 on the BSE. The stock traded below its 200 DMA.
Originally published at ways2capital-review.blogspot.com on August 27, 2018.