Amazon Strengthens Foothold In India With 49 Percent Stake Buy In Future Coupons

By  |  August 22, 2019

United States-based online giant Amazon is acquiring a 49 percent stake in Future Coupons, an Indian entity owned by the country’s second-largest retail chain Future Group. 

The group said in a regulatory filing released today that Amazon.COm NV Investment Holdings LLC has entered into a share subscription agreement and a shareholders’ agreement.

While the financial implications of the deal remain an inside knowledge, Amazon is at liberty to get all or some of the promoter’s shareholding in Future Retail Limited between the third and tenth year in “certain circumstances subject to applicable law.

“Pursuant to these agreements, Amazon has agreed to make an equity investment in Future Coupons Limited for acquiring a 49 percent stake comprising both voting and non-voting shares. As part of the agreement, Amazon has been granted a call option,” Future Retail said in a filing (PDF) to the local stock exchange.

“The Promoters have also agreed to certain share transfer restrictions on their shares in the company for the same tenure, including restrictions to not transfer shares to specified persons, a right of first offer in favour of Amazon, all of which are subject to mutually agreed exceptions (such as liquidity allowances and affiliate transfers).

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The transaction contemplated above is subject to obtaining applicable regulatory approvals and customary closing conditions,” Future Retail added.

Meanwhile, Future Coupons owns a stake of around 7.3 percent in Future Retail, according to previous regulatory filings. March 5, 2019, the Indian company approved the issuance and allotment of 3.96 million warrants to Future Coupons. During the 18 months starting from the allotment date, warrant conversion can be exercised at any time. 

Any amount of money derived from the deal will make up a war chest with which Future Retail will go to battle with its rivals, physically and online. As for Amazon, it’s not the first move to obtain a market share of India’s growing internet market.

The U.S giant has already invested USD 6 Bn so far, and the new deal is meant to strengthen its presence in the country. It is also doing this to have firepower against Walmart. 

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