Amazon is in a battle for India’s consumers with rival Walmart, which spent $16 billion last year to acquire e-tailer Flipkart, and the ecommerce venture of Mukesh Ambani, Asia’s richest man, that plans to combine online and offline retail formats in India.

(Bloomberg)—Amazon.com Inc., No. 1 in the Internet Retailer 2019 Top 500, struck a deal that gives it the right to eventually buy a stake in India’s Future Retail Ltd., as the U.S. giant seeks to bolster its presence in one of the world’s fastest-growing retail markets.

Amazon.Com NV Investment Holdings LLC agreed to buy 49% of Future Coupons Ltd., Future Retail said in a filing Thursday. The deal gives Amazon the option to buy all or part of Future Coupons’ shareholding in Future Retail, though that won’t be exercisable until between three and 10 years.

The terms of the agreement weren’t disclosed. The Indian company said earlier this month that Future Coupons held warrants that would give it a 7.3% stake in the listed entity.

People familiar with the matter said last week that Amazon was in late-stage talks to acquire as much as 10% of Future Retail, with the Indian company seeking a valuation of about 20 billion rupees ($278 million) for the stake.

“Amazon has agreed to invest in Future Coupons Limited, which is engaged in developing innovative value-added payment products and solutions such as corporate gift cards, loyalty cards, and reward cards primarily for corporate and institutional customers,” the Seattle-based company said in an emailed response to Bloomberg. “This investment will enhance Amazon’s existing portfolio of investments in the payments landscape in India.”

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Amazon’s ambitions

The link-up with India’s No. 2 retailer by revenue underscores Amazon’s ambitions in the country, after losing ground in China. India’s modern retail market will more than double to $188 billion by 2023 from $79 billion last year, according to consultant Technopak Advisors.

Amazon is in a battle for India’s consumers with rival Walmart Inc. (No. 3), which spent $16 billion last year to acquire e-tailer Flipkart, and the ecommerce venture of Mukesh Ambani, Asia’s richest man, that plans to combine online and offline retail formats in India.

Amazon has been acquiring small stakes in other Indian brick-and-mortar chains in the past few years, such as Shoppers Stop Ltd. and a grocery chain from the Aditya Birla Group.

Mumbai-based Future Retail operates more than 2,000 stores across 400 Indian cities, including the “Big Bazaar” stores that are designed to appeal to value-conscious urban consumers.

The deal with Amazon will help the Indian retailer adapt better in the highly competitive sector, local brokerage Edelweiss Securities Ltd. said in a note on Friday.

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“Players opting for omni-channel platform will ace the game,” Edelweiss said, adding that it was essential for Future Retail “to join hands with a global player to bolster it financially as well as technologically.”

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