Amazon looking for more clarity on FDI norms, keeps Future Group buy plan on hold
The US e-commerce Giant Amazon (NASDAQ:AMZN) has decided to buy stake in Kishore Biyani’s Future Group. The company now a days is analyzing the damage done by new FDI rules and will not go ahead with the plans until it gets more clarity to expand its offline presence, said sources close to the development. It is also reassessing plans to buy More retail after getting clarity on FDI norms.
Things were moving as planned and Amazon was to close the deal in the first quarter of 2019 but FDI came into effect and the e-tailer had to change its plan, sources close to the development said. Amazon had kept aside $2 billion to invest in retail chains, the report said.
In August last year, Amazon had signed a term sheet with the Future Group to buy a stake between 10 and 15 percent for up to $700 million. It was touted as a probable third investment for the e-tailer.
In October 2017, Jeff Bezos-led firm had bought 5 per cent stake in Shoppers Stop for $26.35 million. In September last year, Amazon along with PE firm Samara Capital signed a deal to acquire food and grocery retail chain More.
The e-tailer planned to have strong hold through the deal in omnichannel retailing as it would have given access to food and grocery market through the Big Bazaar and Nilgiris supermarket chains and other outlets.
In the recently implemented FDI policy for e-commerce, the Indian govt prohibited marketplaces from selling products through companies in which they own stakes. The policy asked Amazon and Walmart-owned Flipkart to restructure their business model.
Amazon India had to add new sellers and delist about 500,000 products from its sellers Cloudtail, Appario and Shoppers Stop.