The talks between the two companies started in January when heads of the two companies Kishore Biyani and Jeff Bezos met at Amazon’s Seattle headquarters, the report said
Amazon will soon acquire minority stake in Future Retail, whose supermarket chains Big Bazaar and Nilgiris will give it exposure to nearly a third of India’s organised food and grocery market.
The e-commerce giant is routing this investment, worth Rs 2,500 crore, as a foreign portfolio investor (FPI), sources told The Economic Times.
"Amazon will acquire about 9.5 percent stake in Future Retail — which has over 1,100 physical stores in India — and has already signed a term sheet. The deal will be announced after board approval on November 14," sources told the paper.
The talks between the two companies started in January when heads of the two companies Kishore Biyani and Jeff Bezos met at Amazon’s Seattle headquarters, the report said, adding that many meetings were held between the executives of Future Group and Amazon in following months.
India allows up to 51 percent overseas investment in multi-brand retail. However, Amazon is picking up a stake in Future Group through its arm, which is registered as an FPI.
An FPI can acquire stake less than 10 percent in an Indian entity as a single firm, while an Indian company can dilute up to 49 percent stake to multiple FPIs.
Amazon holds a 5 percent stake in Shoppers Stop, which it picked up through a similar route last year. Along with Samara Capital, the Jeff Bezos-led company also bought a stake in More supermarkets from Aditya Birla Retail Group.
The company is clearly trying to enter offline retail in India, Harminder Sahni of retail consultancy firm Wazir Advisors, told the paper. "It can't just be a financial investment. They will surely leverage Future Group's network and back-end facilities for supply chain and other operations," he added.India’s food and grocery market is expected to become the fastest-growing retail segment in the country, expanding at a compounded annual growth rate of 141 percent, according to a Morgan Stanley report.