Amazon to buy 49% stake in Future Coupons in offline retail push

In its latest move to expand its presence in India’s brick-and-mortar retail sector, Seattle-headquartered ecommerce Amazon is acquiring a 49% stake in Future Coupons, an arm of Kishore Biyani-owned Future Group, the country’s second largest retail chain, according to a filing with stock exchanges yesterday.

Future Coupons holds 3.96 lakh warrants in Future Retail, which when exercised will convert into a 7.3% stake in the latter, as per prior regulatory filings.

“We have been informed by Mr Kishore Biyani on behalf of the existing shareholders forming part of the promoter group and Future Coupons Ltd that they have entered into a share subscription agreement and a shareholders' agreement with Amazon.Com NV Investment Holdings LLC (Amazon). Pursuant to these agreements, Amazon had agreed to an equity investment in Future Coupons Ltd for acquiring a 49% stake comprising, both voting and non-voting shares," Future Retail said in yesterday’s filing.

The financial details of the transaction were not disclosed.

As part of the agreement, Amazon will also reserve a call option that will allow it to acquire all or part of the promoter shareholding in Future Retail. The call option “is exercisable between the 3rd and 10th years, in certain circumstances, subject to applicable law,” the filing said.

Future Retail operates retail chains under several formats including Big Bazaar, Nilgiris and Hypercity. It manages over 2,000 stores across 400 cities, effectively controlling about a third of India’s organised food and grocery market.

The Jeff Bezos-owned Amazon, which commands a sizable share of India’s booming ecommerce market, has been on a quest to buy a piece of Future Retail since early last year, according to multiple media reports. The move is in line with an ongoing strategy to strengthen its presence in the brick-and-mortar retail sector over the years.

In September last year, it teamed up with private equity firm Samara Capital to acquire a stake in Aditya Birla Group-owned supermarket chain More. More runs about 600 supermarkets and 20 hypermarkets across the cuntry. Earlier, it acquired a 5% stake in fashion and lifestyle retailer Shoppers Stop, which operates 83 stores across 40 cities.