New Delhi, April 4 -- Indian private equity firm Samara Capital is set to infuse additional capital into one of its consumer-facing portfolio companies before it gears up for its public market debut, probably by the end of 2024, two people aware of the development told VCCircle.
Samara, which struck a new deal about a month ago after making several exit moves last year, is likely to invest around Rs 50-60 crore ($6-7.2 million) in More Retail Pvt. Ltd, along with its strategic partner Amazon, the people said, asking not to be identified.
The PE firm had joined hands with ecommerce major Amazon to acquire the food and grocery retail chain from Aditya Birla Retail Ltd in 2018. After the transaction, Samara became the majority owner of the business.
The fresh infusion is likely to be part of a pre-IPO transaction, one of the people cited above said. He added that the company is aiming to raise around Rs 500 crore in the round.
This will likely be followed by an initial public offering where the company may target to raise around Rs 2,000 crore in another six to nine months, the person added.
An email query sent to Samara remained unanswered till the time of filing this article. An Amazon spokesperson declined to comment.
Samara and Amazon had bought More possibly at an enterprise value of little over Rs 4,000 crore, or about $560 million at the exchange rate prevailing in September 2018. However, the terms of the deal may have accounted for debt on More's books. The actual cash or equity component of the deal is believed to be around $40-50 million.
Samara and Amazon have also infused Rs 800 crore into More over the last four years.
The PE firm, along with its limited partners (LPs), is likely to have invested Rs 500-600 crore into the company over the years, marking one of its largest commitments so far.
Despite the capital infusion, the retailer's topline has stagnated and losses remain high. The company posted net sales of Rs 4,506 crore in 2022-23, compared with Rs 4,384 crore in FY19. The company is believed to have ended the twelve months to March 2024 with a decline in revenues compared with FY23 levels.
The company managed to narrow its losses to Rs 78 crore by FY21 from a loss of Rs 499 crore, but it slipped deeper into the red in the following years. In FY23, its net loss was Rs 550 crore, according to VCCEdge, the data research platform of VCCircle.
One of the primary factors contributing to poor revenue growth could be slowing down of store launches to curb operational expenses. As against 111 stores added during FY21 and 133 outlets in the year after, it added just 26 stores after factoring in store closures in FY23. Between April 2023 and January 2024, total outlets under More declined to 778 from over 900 as the company consolidated operations with closure of as many as 140 outlets and addition of mere three new stores. The increasing popularity of instant delivery apps such as Blinkit and Swiggy's Instamart, apart from grocery delivery companies such as BigBasket, may also have hurt More's business.
To be sure, linkages with Amazon have partly made up for the decline in business from physical stores . More's own instant delivery app, floated on a pilot basis a couple of years ago, along with business via Amazon grew almost by a fourth in FY24.
In the broader value retail segment, private equity-backed Vishal Mega Mart is also gearing up for an IPO that could see the company raising $1 billion. Last month, VCCircle reported that value fashion retailer Kolkata-based Baazar Style Retail Ltd was also planning to go public.
Published by HT Digital Content Services with permission from VC Circle.