Amazon Acquires stake in Aditya Birla Group’s Retail chain ‘More’

Just four months after the US-based retail giant acquired Flipkart, In what seems like a major boost to global e-commerce giant Amazon’s plans of dominating the retail market in India, reports have surfaced that Aditya Birla Group’s retail chain More has been acquired by Amazon and private equity fund Samara Capital.

While the quantum of the deal was not officially revealed, it is estimated at Rs4,200 crore ($582 million).

“(The) board of directors of the company, at its meeting, held on Sept. 19, 2018, has approved the sale of its entire shareholding in Aditya Birla Retail…constituting 62.19% of the paid up capital of ABRL, to Witzig Advisory Services…owned and controlled by the Samara Alternative Investment Fund,” the RKN statement said (pdf).

More was set up in 2007 by one of India’s largest conglomerates, the Aditya Birla Group. But much like its peers, it has struggled to perform. As of 2017, ABRL’s debt stood at Rs6,455 crore.

Regulatory filings have not disclosed Amazon’s stake in the venture. In any case, India’s foreign direct investment (FDI) laws do not allow an overseas firm to control more than a 49% stake in Indian multi-brand retail chains.

An email query sent to Amazon remains unanswered.

Digging its heels

The deal is yet another move by Amazon to get a bigger hold on India’s $670 billion retail market.

Last year, the American e-commerce giant picked up a 5% stake in the Mumbai-based departmental-store chain Shoppers Stop for an estimated Rs179.25 crore ($27 million). At that time, the chain had 80 stores, and Amazon planned to set up its own experience centres across these outlets to “bring in the touch and feel aspect on Amazon.in’s exclusive assortment.”

Now, the More stake will give it access to over 500 supermarkets and 20 hypermarkets across India.

“The winning formula is an omnichannel model that leverages the reach, convenience, and efficiency of the internet with the immediacy and tactile experience of brick-and-mortar,” said Kartik Hosanagar, professor of technology and digital business at University of Pennsylvania’s Wharton School. “Amazon has embraced this omnichannel strategy in the US…It’s no different in India. Arguably, the value of a physical channel is even more in India because a large portion of India cannot still be reached on the internet.”

 

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