Amazon seeks CCI nod to pick up stake in JV acquiring supermarket chain More

Amazon seeks CCI nod to pick up stake in JV acquiring supermarket chain More
Photo Credit: Photo Credit: Shah Junaid/VCCircle

US-based e-commerce giant Amazon has sought approval from the anti-monopoly body for a 49% stake in a joint venture that will acquire More, the food and grocery retail chain of Aditya Birla Retail Ltd (ABRL).

The joint venture, Witzig Advisory Services Pvt. Ltd, will be 51% owned by private equity firm Samara Capital. Witzig has, in turn, asked the Competition Commission of India to greenlight its acquisition of More, according to a company filling to the CCI.

Last month, an Aditya Birla Group company had said in a stock exchange filing that Witzig would buy More, but it hadn't disclosed Amazon’s stake in the JV.

Amazon will pick up the stake in Witzig through an investment arm. The same unit had purchased a 5% stake in Indian bricks-and-mortar chain Shoppers Stop Ltd a year ago.

Samara had been in talks with ABRL for the transaction over the past few months. In May, VCCircle reported that the private equity firm was likely to rope in its limited partners—or investors in its funds—to buy a 50-60% stake in ABRL.

ABRL, part of diversified conglomerate Aditya Birla Group, runs 523 supermarkets and 20 hypermarkets under the More brand, its website shows. For the year ended March 2017, ABRL posted a 20% rise in revenue to Rs 4,193.5 crore but net loss remained little changed around Rs 644 crore.

More is the fourth-largest supermarket chain in the country after Reliance Retail Ltd, Future Group and DMart.

For Amazon, which competes with Walmart Inc.-owned Flipkart in India’s e-commerce market, the acquisition will give it a ready base to expand its Indian grocery retail business. Amazon started rolling out its food retail venture in India this year and had earmarked $500 million for the business last year. The venture will sell third-party items as well as Amazon's food products produced and packaged locally.

The deal is also in line with Amazon's offline-to-online retail strategy that it has deployed in the US with the acquisition of grocery chain Whole Foods Market Inc. for $13.7 billion last year.

For Samara, the deal is its biggest bet so far. The firm typically invests $15-100 million in a single transaction. Samara is investing out of its second fund, which has a corpus of $300 million, and is looking to raise money for its third fund. Samara has previously invested in companies including diagnostics firm Thyrocare, media firm Cogencis and brokerage firm Sharekhan.