PremjiInvest, KKR join race to acquire Vishal Mega Mart

private equity fund KKR & Co. and Wipro founder Azim Premji’s family office PremjiInvest have joined the race for acquiring stakes in fashion hypermarket chain Vishal Mega Mart, two people aware of the development said.

The retail chain is currently owned by private equity TPG Capital and south India’s biggest conglomerate Shriram Group. While Vishal Mega Mart Pvt. Ltd (VMMPL), owned by TPG, runs the back end operations, Airplaza Retail owned by Shriram Group runs the front-end stores. Kotak Mahindra Capital is advising the sellers.

KKR and PremjiInvest have submitted separate bids for the stake, the two people cited above said on condition of anonymity.

US-based Carlyle Group, a consortium of Kedaara Capital and Partners Group, and online retailer Flipkart are among contenders for Vishal Mega Mart, The Economic Times had reported on February 15.

Spokespersons for TPG, PremjiInvest and Carlyle declined to comment, while emails sent to KKR and Shriram Group did not elicit any response.

If a deal materialises, it would be the first exit for a global private equity fund from an asset that has turned around after restructuring.

The Vishal Mega Mart website claims the company operates over 204 stores in over 110 cities and towns.

In 2011, the company promoted by Ram Chandra Agrawal had run up a debt of ₹760 crore with lenders such as HDFC Bank, HSBC, ING Vysya Bank and State Bank of India. It was acquired by TPG and Shriram Group for a total of ₹70 crore.

According to a Crisil Ratings February 2017 report, TPG Capital had infused ₹669 crore into VMMPL till March 31, 2016. It injected an additional ₹100 crore in fiscal 2017.

Debt levels, though reducing, remained high at ₹324 crore (₹528 crore, including compulsory convertible debentures) as on March 31, 2016, it added.

For fiscal 2016, VMMPL reported a loss of ₹36.2 crore on revenue of ₹1,346 crore, against a net loss of ₹60.3 crore on a revenue of ₹1,108 crore for the previous year.

“The main concern for global PE funds is to find the right domestic partner to meet the regulatory requirements and all the foreign funds are in discussions with local retail companies to form consortiums,” said the second person on condition of anonymity.