Amazon Bids $400 Mn For 30% Stake In Spencer’s Retail

The deal with Amazon was believed to be in the penultimate stage but was held up due to valuation: sources

Spencer’s is reportedly looking for a better valuation than what Aditya Birla's grocery and retail stores chain More got

More is the fourth-largest supermarket chain in the country

US ecommerce behemoth Amazon has reportedly offered $400 Mn to Kolkata-headquartered Spencer’s Retail for 30% stake in the company. Another global e-commerce major Alibaba is also eyeing a minority stake in this food and grocery retail chain.

Spencer’s is a subsidiary of RP Sanjiv Goenka group’s flagship power unit,Calcutta Electric Supply Corporation (CESC). It runs 128 stores in over 30 cities across India, including 58 large-format, hypermarkets and supermarkets. Its revenue was reported to be $282.9 Mn (INR 2,091 Cr) in FY18. 

The deal with Amazon was believed to be in the penultimate stage but was held up due to valuation, Business Standard cited anonymous sources as indicating.

Amazon India didn’t respond to Inc42’s query at the time of publication, and Spencer’s declined to comment. 

Spencer’s is reportedly looking for a better valuation than what Aditya Birla’s grocery and retail stores chain More got. The ecommerce company along with private equity fund Samara Capital are reportedly co-investing in a facilities support and management and value-added services company called Witzig Advisory Services Private Limited, which has agreed to acquire More.

Aditya Birla’s grocery and retail stores chain More is the fourth-largest supermarket chain in the country and runs 490 supermarkets and 20 hypermarkets.

In December last year, Amazon also picked up a 5% stake in Shoppers Stop through its investment arm Amazon NV Holdings.

Meanwhile, Amazon also lost its bet on Kishore Biyani’s Future Retail. IT czar Azim Premji-led Premji acquired a 6% stake in Kishore Biyani’s Future Retail for $251 Mn (INR 1700 Cr) in a block deal.

Amazon has been aggressive in picking up stakes in Indian physical retail companies. Here’s a quick rundown:

• The US-based etailer received the final nod from the Indian government in July 2017 to invest $500 Mn in India’s food retail space.
• In July 2017, Amazon committed to investing up to $500 Mn in its food retail business in India.
• In June 2018, Amazon invested $1.5 Mn (INR 10.5 Cr) in its Indian food retail arm, Amazon Retail India, which is also a vendor on Amazon’s Pantry and Prime Now grocery offerings.

Amazon is also the first foreign company to start with its food retail venture in India and has already started with its pilot services in Pune. It may look at full ownership in some of the chains once the policies of the land in multi-brand physical retail is liberalised.