Vishal Mega Mart acquisition: Following world's biggest e-commerce deal of Flipkart buyout, another major offline deal is here as private equity firms Partners Group and Kedaara Capital Fund are set to acquire value retail chain Vishal Mega Mart from PE firm TPG.
Vishal Mega Mart acquisition: Following world’s biggest e-commerce deal of Flipkart buyout, another major offline deal is here as private equity firms Partners Group and Kedaara Capital Fund are set to acquire value retail chain Vishal Mega Mart from PE firm TPG. While the deal size has not been explicitly disclosed, a PTI report said that it is expected to be around Rs 5,000 crore. The current owners had TPG and Shriram Group had purchased the firm for Rs 70 crore, back in 2010. According to a recent Jefferies report in April-18, Vishal Mega Mart slipped into a crisis due to aggressive expansion of its stores, leading to piling of debt on its books. We take a closer look at the details of the deal.
The strategic rationale
With this major investment, the PE firms are eyeing to get a share of india’s burgeoning retail market. “We believe the company offers a unique value proposition to an underserved customer segment and will continue to have strong tailwinds for a long time,” Partners Group Private Equity Asia Managing Director Manas Tandon said. Vishal Mega Mega will look to leverage Partners Group and Kedaara Capital’s experience in working in FMCG businesses.
Notably, Kedaara’s portfolio boasts of names such as Vedant Fashions, Mahindra Logistics, AU Small Finance Bank, Bills Forge etc. “We believe we have found the ideal partners for this ambitious next phase (of growth) in Partners Group and Kedaara Capital and expect to benefit from their combined track records of working with fast-growing consumer businesses,” Vishal Mega mart’s MD and CEO Gunender Kapur said. Partners Group said the value creation initiatives will focus on further expanding VMM’s presence, adding to its product assortment and maximizing supply chain efficiency, said the PTI report.
About Vishal Mega Mart
According to the company’s website, the company has over 229 stores in 110 cities and towns across the country. The Gurgaon-based firm is the franchisor of the Vishal Mega Mart brand and wholesale supplier to over 230 hypermarket stores across India, which are operated by a network of franchisees. The company is provides retail products in Apparel, General Merchandise, Grocery and Personal Care in Tier-1, Tier-2 and Tier-3 cities and towns, according to its website.
Deal expected by year end
The transaction is subject to regulatory approval and is expected to close later this year, Partners Group said. Notably, Partners Group looks to focus on further expanding Vishal Mega Mart’s presence, adding to its product assortment and maximizing supply chain efficiency. The Switzerland headquartered company is a global private markets investment management firm with over 62 billion euro (USD 74 billion) in investment programmes under management in private equity, private real estate, private infrastructure and private debt.