The oil-to-telecom major, which is boosting its presence in the retail segment through Reliance Retail, said the acquisition is being done as part of the scheme in which Future Group is merging certain companies carrying on the aforesaid businesses into Future Enterprises (FEL).
Under the scheme, the retail & wholesale undertaking is being transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of Reliance Retail Ventures, along with the logistics & warehousing undertaking.
RRFLL also proposes to invest Rs 1,200 crore in the preferential issue of equity shares of FEL to acquire 6.09 per cent of post-merger equity, and Rs 400 crore in a preferential issue of equity warrants which, upon conversion and payment of balance 75 per cent of the issue price, will result in RRFLL acquiring further 7.05 per cent of FEL.
RIL said the acquisition of the retail, wholesale and supply chain business of the Future Group complements and makes a strong strategic fit into Reliance’s retail business.
This will help Reliance Retail to accelerate support to millions of small merchants in increasing their competitiveness and enhance their income during these challenging times, the firm said.
“We hope to continue the growth momentum of the retail industry with our unique model of active collaboration with small merchants and kiranas as well as large consumer brands,” Isha Ambani, Director, Reliance Retail Ventures, said in a release.
The company said Future Group’s portfolio composition in apparel, general merchandise and FMCG brands will allow for a wider offering to its customers.
This acquisition is subject to SEBI, CCI, NCLT, shareholders, creditors and other requisite approvals, it added.
India’s retail market is expected to grow 8 per cent compounded anually to $1.32 trillion by FY26 from $822 billion at present.
Within this, organised retail is seen growing at 17 per cent compounded annually to $230 billion from $89 billion, as the share of organised retail is seen rising to 18 per cent of the market by them from 11 per cent .
On Friday, RIL shares closed 0.2 per cent higher at Rs 2,115.60 on the BSE, while benchmark Sensex climbed 0.9 per cent to 39,367.31 points.