The American e-commerce giant plans to show that 24,713 crore RIL-Future deal also includes foreign funds inflow into Future Retail as foreign investors hold substantial stake in RIL and its arm Reliance Retail Ventures Ltd, two people familiar with Amazon’s plan said requesting anonymity. .
“If RIL can bring in money, Amazon can bring in more for Future Group if needed. The structure proposed by RIL can be easily created with another player to help it with sufficient capital in future. The name Samara Capital was proposed for this purpose only but was refused by Future. There are other big investors who can be included in this. Amazon is still ready to help. The future needs about $800 million in immediate capital,” said one of the two people cited above.
The person was referring to the establishment of the Reliance Retail Ventures unit of the Indian conglomerate 47,265 crore by selling 10% stake to foreign investors. Foreign portfolio investors also hold shares in the parent RIL.
In 2018, private equity firm Samara and Amazon jointly bought the Aditya Birla Group’s food and grocery retail chain, More. The acquisition took place through Witzig Advisory Services, a unit of Samara in which Amazon has a minority stake.
Amazon may present its argument on fund flows to the Supreme Court next week.
Future Group’s lawyers are arguing that it was forced to choose RIL because Amazon could not bail out Future in view of foreign investment restrictions on multi-brand retail.
Amazon plans to tell the court that even under existing laws, money can be sent to help struggling Future Retail Ltd (FRL), in part due to how RIL has structured its structure. 24,713 crore purchase of Future Group’s retail and other assets.
Amazon invested 1,431 crore in Future Coupons Pvt Ltd. Ltd. in December 2019, which went directly to FRL as per the agreement between Future Group and Amazon.
Amazon holds a 49% stake in Future Coupons, which in turn owns 9.82% in FRL. The Biyani family holds 43.58% stake in FRL as promoters.
As per the proposed acquisition by RIL, several Future entities (including FRL) will be merged into Future Enterprises Limited, following which retail and wholesale enterprises (including FRL, Big Bazaar, Easy Day and other retail stores) will be transferred outright to Reliance Retail Ventures. Will be -Proprietary subsidiary Reliance Retail & Fashion Lifestyle Limited.
RIL holds 85.06% stake in Reliance Retail Ventures, while foreign investors hold 10.09%.
While Amazon holds a minority interest in Future Coupons, foreign shareholders hold a minority interest in Reliance Retail Ventures.
Spokespersons for Amazon, Future Group, Samara Capital and RIL did not immediately respond to emails seeking comment.
The two people mentioned above said that 31.7% stake in Reliance Retail Ventures’ two wholly owned subsidiaries—Reliance Retail Limited and Reliance Retail & Fashion Lifestyle Limited—are effectively owned and controlled by foreign investors.
This is because foreign investors hold 25.41 per cent in RIL (Reliance Retail Ventures holds 85.06 per cent, Reliance Retail Ventures also holds 10 per cent foreign investors). On Tuesday, the Supreme Court completed the hearing and reserved its verdict in the matter.
Amazon, however, had appealed separately before the apex court against the decision of a division bench of the Delhi High Court, which had stayed the arbitration proceedings at the Singapore International Arbitration Center (SIAC) in relation to the Amazon-Future dispute.
A hearing related to this appeal is likely to take place next week and this is where Amazon plans to present its argument regarding foreign money flows into the FRL in an affidavit.
The arbitration proceedings in the SIAC were to resume on January 5, but have been put on hold following the decision of the Division Bench of the Delhi High Court.
The owners of Big Bazaar and EasyDay retail chains have urged the Supreme Court to go ahead with the RIL deal. Its counsel, senior advocate Harish Salve, said that if the deal is not done, around 30,000 jobs will be lost.
Amazon’s lawyer Gopal Subramaniam has said that his Seattle-based client has always been ready to assist Future Group.
But, during the last hearing, Salve rejected it citing local rules.
India’s policy on multi-brand retail allows foreign holdings of up to 51%, but states can decide whether to allow foreign-retailers within their jurisdiction.
Salve asked the court to allow Future to obtain approval for the deal from shareholders, the antitrust regulator and the company court.
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