PremjiInvest picks up 6% stake in Future Group, Biyani rules out investment talks with Amazon

Amidst the talks of dilute stakes to the global Internet behemoths, Future Group existing stakeholder Bharti Group has sold its 66 per cent holding in the entity to Azim Premji-led investment arm, PremjiInvest.

One of the prominent investors in consumer space in India, the investment wing of Wipro chairman are also investors in Future Lifestyle Fashion and currently holds about 4 per cent stake in the fashion arm alone.

Earlier, it held around 8 per cent in Future Lifestyle but sold half of its stake to private equity major L Catterton Asia.

The value of the transaction is about Rs 1,700 crore, out of which Future Retail will get up to Rs 575 crore due to a clawback provision. "Future Retail has a provision in terms of the gains coming out of this transaction,” said Future Group head Kishore Biyani, as quoted by  Financial Express.

For uninitiated, Clawback provision is a particular contractual clause for money paid for services to be returned under circumstances as stated in the contract.

The reason behind Bharti Group selling stakes is unknown but the Sunil Bharti Mittal-led firm still holds about 3 per cent stake in Future Retail via a group entity called Cedar Support Services.

Future Group, on the other hand, will use the capital through the deal for expansion and reduce its debt and interest.

Interestingly, the secondary cum primary equity deal has come at a time when Biyani is reportedly in talks with Amazon, Alibaba, and Walmart for selling about 10 per cent stake of Future Group.

Jeff Bezos-led e-commerce juggernaut reportedly has a greater chance of acquiring a stake in the local brick&mortar major. The Flipkart's rival proximity with Future Group seems to be a logical move as it eyes to ramp up its fight against arch-rival Walmart (via Flipkart).

Refuting media narratives, Biyani, however, denied such talks saying that the group is not in discussions for selling any stake at the moment.

Cashing on its bet on online fashion store, PremjiInvest has made more than over 5X on its $25 million investment on Myntra when Walmart acquired Flipkart.

With a presence in 255 cities through 930 stores. The firm which controls BigBazaar posted an 8 per cent increase in sales at Rs 18,489 crore in FY18, with a profit before exceptional items at Rs 615 crore.

Going forward, it will be exciting to see how Future Group will be going to be a lucrative proposition for the likes of Alibaba, Amazon, Walmart, and others.

Of late, Biyani has been re-trying to make a dent in omnichannel commerce with Tathasthu 2.0 and app-based grocery and micro-delivery service. Let's see how Future Group bounces back in online commerce game after its disastrous failure with Futurebazaar.com