According to two people with direct knowledge of the plans, Vishal Mega Mart, an inexpensive grocery chain in India, is preparing a $1 billion initial public offering that could raise the company’s valuation to $5 billion. A portion of the proceeds would be used for store expansion.
According to the people, who asked not to be named because the talks were private, Partners Group of Switzerland and Kedaara Capital of India, which together own a majority stake in Vishal Mega Mart, will each sell shares in the offering.
The exact percentages of the two private equity firms’ ownership in Vishal Mega Mart, the amount they would sell, and whether they would keep a majority stake were not immediately apparent.
Gunender Kapur, the chief executive of Vishal Mega Mart, did not reply to requests for comment from Reuters. While Partners Group declined to comment, Kedaara likewise remained silent.
The retailer sells groceries and clothing in 560 locations, most of which are in smaller cities. It faces competition from supermarket chain Avenue Supermarts, Tata Group’s Trent, and Indian tycoon Mukesh Ambani’s Reliance.
According to the people, investment banks have been asked to submit pitches for the IPO this week, and the offering is probably going to happen later this year.
The plans are being announced at a moment when the benchmark NIFTY index has increased by 12% over the previous six months, and Indian stock markets are trading close to all-time highs.
With India’s economy expanding quickly and the political climate stable, bankers and analysts predict that initial public offering (IPO) activity will pick up steam. Prime Minister Narendra Modi is expected to easily win a third term in the May election.
According to a report by Fitch-owned India Ratings, Vishal Mega Mart’s net profit increased to 3.2 billion rupees ($917 million) during its most recent fiscal year, which ended in March 2023. The company’s revenues increased by 36% to 75.9 billion rupees.
Based on estimates from Boston Consulting Group, the retail market in India could reach a value of $2 trillion by 2033, from its current value of about $840 billion.
Despite the growth of e-commerce sites like Amazon, brick and mortar stores still account for the majority of the nation’s retail sector, and customers are moving from roadside unbranded stores to chains at lower price points.
An estimated half of Vishal Mega Mart’s sales come from apparel, as the store offers T-shirts for 99 rupees ($1.5) and jeans for $9. In addition to groceries, it also sells luggage and household appliances.
For roughly $350 million in 2018, Partners Group and Kedaara purchased Vishal Mega Mart from rival buyout companies TPG and India’s Shriram Group.
