Amazon.com, Inc. AMZN is stepping into India's household and grocery retail sector.
What Happened
Future Retail — which operates Big Bazar and other smaller retailers such as EasyDay, Heritage Fresh and Nilgris — said in a regulatory filing with the stock exchange late Thursday that Amazon is buying a 49% stake in Future Coupons Ltd.
The share subscription agreement has also granted a call option to Amazon to acquire all or part of Future Coupons' holding in Future Retail, with the option being exercisable between the third and 10th years of the deal in certain circumstances, subject to applicable regulations.
Future Coupons own 39.6 million warrants in Future Retail that are equivalent to a 7.3% stake.
Why It's Important
Amazon's investment is seen an effort to gain a firm foothold in Indian household and grocery retail.
The e-commerce giant made an equity investment last year in food and grocery retailer More, owned by the Aditya Birla Group. It also has a minority stake in the department store chain Shoppers Stop.
About 88% of the retail market in India is reportedly controlled by the unorganized sector, and out of the 12% which is at the disposal of organized retailers, about 25% is accounted for by e-commerce companies.
Amazon shares were down 1.78% at $1,773.47 at the time of publication Friday.
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Photo courtesy of Amazon.
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