NEW DELHI: Aditya Birla Group (ABG) on Wednesday signed off on a deal that will see it selling its retail arm Aditya Birla Retail Ltd (ABRL) to Samara Alternative Investment Fund. While, neither party to the transaction has disclosed the deal size, reports state that the enterprise value would stand at `4,200 crore. ABRL operates the ‘more’ chain of hyper and supermarkets.
In a filing made by one of ABRL’s holding firms, RKN Retail Pvt Ltd, “the Board of Directors... at its meeting held on September 19, 2018, has approved the sale of its entire shareholding in ABRL… constituting 62.19 per cent of the paid up capital..., to Witzig Advisory Services Private Limited (“Witzig”), owned and controlled by the Samara Alternative Investment Fund”.
ABRL is owned by ABG through two holding firms — RKN Retail Pvt Ltd and Kanishtha Finance & Investment Pvt Ltd — which own 62.19 per cent and 37 per cent of stakes respectively. Both the firms have signed a “share purchase agreement with Witzig, to sell their combined stake aggregating to ~ 99.99%”, the filing added.
However, the deal is likely to see American retail giant Amazon also pick up a substantial stake in ABRL, reports said. While ABRL, Samara and Amazon have all refused to confirm Amazon’s role, industry sources said that the firm might be picking up around 49 per cent of ABRL through ownership interests in Witzig, with the rest of the 51 per cent held by Samara. As per India’s FDI policy, foreign-origin retailers may own only up to 51 per cent in firms operating in the multi-brand retail sector.
If Amazon does confirm its involvement, it will open up another front in its tussle with Walmart. ABRL operates 509 supermarkets and 20 hypermarkets across India under the ‘more’ brand, making it the fourth-largest supermarket chain in the country after Reliance Retail Ltd, Future Group and DMart.
loss-maker
ABRL has not been a top-earner for the ABG, posting consecutive EBITDA losses in the recent past, while also flaunting a substantial debt burden. As per the most recent financials available, the firm posted an EBITDA loss of I175.4 crore and I113.5 crore in FY16 and FY17 respectively. Debt as of April 2017 stood at I6,455.8 crore.