In wake of new FDI policy implemented this month, US e-tailer Amazon has decided to put its plans to buy stake in Kishore Biyani’s Future Group on hold.
The company is still assessing the damaged done by the new FDI rules. It will not go ahead with the plans until it gets more clarity to expand its offline presence, said sources close to the development. It is also reassessing plans to buy More retail.
Things were moving as planned and Amazon was to close the deal in the first quarter of 2019 but FDI came into effect and e-tailer has now to change its plan, sources said to BS report.
Amazon had kept aside $2 billion to invest in retail chains.
In August last year, Amazon had signed a term sheet with the Future Group to buy a stake between 10 and 15 percent for up to $700 million. It was touted as a probable third investment for the e-tailer.
In October 2017, Jeff Bezos-led firm had bought 5 per cent stake in Shoppers Stop for $26.35 million. In September last year, Amazon along with PE firm Samara Capital signed a deal to acquire food and grocery retail chain More.
The e-tailer planned to have strong hold through the deal in omnichannel retailing as it would have given access to food and grocery market through the Big Bazaar and Nilgiris supermarket chains and other outlets.
In the recently implemented FDI policy for e-comm, the govt prohibited marketplaces from selling products through companies in which they own stakes. The policy asked Amazon and Walmart-owned Flipkart, to restructure their business model.
Amazon India had to add new sellers and delist about 500,000 products from its sellers Cloudtail, Appario and Shoppers Stop.