Amazon Assembles Team to Execute Revival Plans for Future Group
By – Ashwathy Nair
- An infusion of ₹6,000 crores in equity and debt was involved in the proposal.
- The revival plan reflects in a presentation made by Future Group to a group of investors.
- Another plan of Amazon is to reduce debt and use the cash to improve its other businesses.
A team of bluechip investors have been assembled by Amazon.com, which includes TPG Capital, SSG Capital, PremjiInvest, and Verlinvest, in order to rescue the flailing Future Group of Kishore Biyani in early 2020.
An infusion of ₹6,000 crores in equity and debt was involved in the proposal and debt injection, as well as a restructuring of Future Retail’s board and top management.
Amazon worked in March, April, and May to help Future Group repay increasing bank debts, prevent defaults, and boost cash flow by selling its goods on Amazon.
The plans of revival that is engineered by Amazon reflects in a presentation, which is made by Future Group to a group of investors together with Amazon.
Future Group executives proposed investments in tranches beginning in May 2020 in a presentation titled Putting Future Retail Ltd (FRL) Back on Track, which was given in front of investors including Amazon members.
Even as the retail company managed to navigate a serious financial crisis amid the coronavirus outbreak and a national lockdown, a proposal to marshal a group of marquee investors backed by Amazon to save Future Group from its liquidity squeeze and related issues was in the works.
As per the presentation that was cited above, the investors would be bringing ₹6000 crores through equity as well as debt to tackle the bank dues of the group by helping it stay afloat without selling it to RIL or any retail rival.
Another plan was also proposed by Amazon, which involved a sale of retail businesses of Future Group to reduce debt along with using the cash to improve its other businesses.
However, on August 29, 2020, Future Group announced the sale of its retail and wholesale properties to Reliance Retail Ltd, which is a subsidiary of RIL, for ₹24,713 crores. On October 25, a Singapore arbitration tribunal released an interim order banning the offer, resulting in a win for Amazon. The case is now before the Delhi High Court and the Supreme Court, while the National Company Law Tribunal (NCLT) must approve the contract.
Future Group’s argument that an unhelpful Amazon pressured it to form an alliance with Amazon’s main rival RIL in India’s $900 billion retail markets could be undermined by these documents.
After acquiring 49 per cent of Future Coupons ₹1,500 crore in August 2019, Amazon now owns about 3.5 per cent of Future Retail. The business says that the 2019 agreement forbids Future Group from selling Future Retail shares to competitors in the retail industry.
The primary aim of Amazon and Future’s joint agreement was to speed up the process of restoring normalcy in operations and placing Future Retail back on a path of growth and profit maximization.
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