More Retail, which is owned by Amazon and private equity firm Samara Capital, is looking to divest about a fifth of its equity to external investors at a valuation of around $2 billion, said people aware of the matter.
The Amazon-Samara combine has approached family offices and domestic capital investors for this round, according to the sources, who said the planned share sale comes ahead of a potential public listing in the next 12-18 months.
The retail chain, once part of Aditya Birla Group, was acquired by Amazon-Samara in 2019 at an estimated value of under $600 million.
“Talks have been underway for diluting 10-20% in More to onboard domestic investors before the planned IPO. It is likely to be a 15% sale to investors,” said one person cited above.
ReTale reported in September 2022 on More Retail’s IPO plans, with the latest stake sale talks aimed at benchmarking a price before an eventual public offering.
“We don’t comment on speculations on what we may or may not do in the future,” an Amazon spokesperson said in response to ReTale’s query.
Emails sent to Samara Capital and More did not elicit any response till press time on Tuesday.
People aware said Amazon is working on further integrating the More Retail stores with its online grocery offering Amazon Fresh. This is being discussed to boost growth plans of More amid increased online adoption for grocery and essentials. In New Delhi and Bengaluru, Amazon Fresh has piloted store pickups of its Amazon Fresh grocery orders.
Witzig Advisory Services houses More, where Samara owns 51% stake while Amazon owns the rest. The investment is part of Amazon’s plan to have a significant omnichannel strategy for its grocery business in India, even as it grows its dominant online presence.
Amazon had big plans with offline retail in India, for which it also invested in Future Coupons –which ran Kishore Biyani’s Future Retail – in 2019. However, it has been embroiled in a legal fight over the deal since Reliance Industries also announced plans to acquire retail assets of Future Group.
Prior to the legal battle, Amazon was also leveraging Future Retail’s BigBazaar stores for its grocery offerings. This included its erstwhile offering of large grocery purchase, Pantry. In 2021, Pantry was merged with Amazon Fresh to create a uniform product offering for Amazon’s India consumers.
In January this year, Coda Holdings Singapore, an Amazon-owned entity, infused close to Rs 32 crore in More, which has over 900 stores across formats in India. More Retail reported a consolidated revenue of Rs 4,929.11 crore in FY22, as against Rs 4,844.44 crore in fiscal 2021. Losses grew to over Rs 474 crore in FY22, compared to Rs 104 crore in FY21.
The regulatory filings on recent cash infusion and audited financials of More were sourced through business intelligence platform Tofler.
Prior to the January fund infusion, about Rs 200 crore was infused in More parent Witzig in the fiscal year ending March 2023, ReTale had reported.
More was originally started as Trinethra in 1986 and eventually raised money from private equity investors. The Aditya Birla Group acquired it in 2007 and rebranded it More.
Even as a potential investment deal is being worked out at More, the retail chain may play a bigger role in Amazon’s grocery offering in the online channel. As per current discussions, there are deliberations on closer integrations with Amazon Fresh and More, online. More Fresh is the retail chain’s own brand in fresh grocery products, while it also has non-food grocery brands like More Essentials, My and others.
Industry executives have told ReTale had Amazon has faced increased competition from rivals across various formats in the e-grocery space since it revamped the grocery vertical in 2021. Tata-owned BigBasket is the largest e-grocery player in India currently, while Walmart-owned Flipkart and others are also operating in the space.
Amazon has not ventured into the so-called quick commerce sector, where prominent players include Swiggy’s Instamart, Zomato’s Blinkit, Zepto and others.
“There is a discussion on having just one brand offering online and offline as well. This would also boost More’s value across channels. But no decision has been finalised yet,” said one of the people cited above. Currently, Amazon is running a new ad campaign with actor Manoj Bajpayee to promote Fresh.
Amazon did not offer any additional comment on discussions related to a brand revamp for its grocery business either.
Online adoption for grocery saw a major push during the Covid-19 outbreak. Subsequently, as offline stores have opened fully, online marketplaces have realised the importance of an omnichannel model for both sourcing as well as to offer customers an additional outlet.
In fact, Amazon acquired Whole Foods in the US for an omnichannel play to serve its consumers better and use the network of retail stores. In August 2021, ReTale reported saying Amazon was evaluating the slotted pickup for its online orders at More Retail stores in Bengaluru. Since then, the service has been expanded to other cities.
All of this comes at a time when globally, Amazon has seen slowdown in business and is cutting costs to withstand the macroeconomic condition. It has fired around 27,000 people in corporate roles, including around 1,000 in India. It shut early-stage businesses such as food delivery, edtech and a distribution arm late last year in India.
Last week, in its quarterly earnings, Amazon said its net sales from international operations —including India — remained flat in the first quarter of 2023, even as its loss from these markets narrowed marginally. For the quarter ended March 31, the Seattle-based company posted a loss of $1.24 billion on net sales of $29.1 billion from international operations. These were $1.28 billion and $28.7 billion, respectively, a year earlier.
India also did not find any mention in the post-earnings call, unlike in previous quarters.