Reliance Industries Ltd (RIL) is looking to pick up a minority stake in Future Group’s consumer products business as part of its larger strategy to acquire Kishore Biyani’s entire retail assets, The Economic Times said.
Future Consumer Ltd (FCL), the FMCG arm of Future Group, was not part of the original deal discussions with RIL, the publication added.
According to the deal contours that are currently being worked upon, Future Group will merge five listed units across grocery, apparel, supply chain and consumer business into Future Enterprises, which currently holds all retail back-end and infrastructure.
Future Retail assets include more than 1,700 supermarkets and lifestyle stores including brands like Big Bazaar and Central.
A minority stake in the consumer goods business will give RIL greater say over pricing and discounting strategies for products sold in its stores as well as online.
“Future Enterprises will then hive off all retail assets and sell them to RIL as a single unit. In addition, RIL will also buy a small stake in Future Enterprises that will house the residual business, primarily FMCG products of FCL,” said officials.
FCL has nearly three dozen brands including Tasty Treat, Golden Harvest and Clean Mate and gets a third of its revenue from kirana stores and other modern retailers outside the Future Group network.
Separately, Ajay Piramal has decided to sell his non-core glass business and has mandated Bank of America and Axis Capital to find buyers at a valuation of up to $1 billion (Rs 7,485 crore), people in the know told The Economic Times.
Global buyout funds such as KKR, Advent, Carlyle, TPG and Blackstone, PAG, investment companies like Temasek and global rivals such as Saverglass and Veriscence, are being tapped as the sale process was officially kicked off recently, the persons said.
International strategic players like Gerresheimer Glass and Vetroplas are other potential candidates.
Industry peers feel Piramal’s premium valuation ask could be a stretch for several suitors.
Last month, the group sold a fifth of its pharma business to private equity firm Carlyle for close to $490 million (Rs 3,700 crore).
