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In what is slated to be the largest private equity transaction in the retail grocery business in the country, Hyderabad-based retail grocery chain, Trinethra Super Retail Ltd has consolidated its operations with Bangalore-based Fabmall Pvt Ltd.
Bangalore-based private equity firm GW Capital Pvt Ltd, which financially participated in the deal will be the largest shareholder in the yet to be named new entity.
The deal size of Rs 45 crore (Rs 450 million) has importantly created one of the largest grocery chains in the country with revenues of about Rs 200 crore (Rs 2 billion). The new entity will see GW Capital holding a majority stake of over 50 per cent.
ICICI Venture, which had invested Rs 8 crore (Rs 80 million) in Trinethra in 2000 for a 40 per cent stake, has exited the company with this consolidation between Fabmall and Trinethra. ICICI's stake was bought for Rs 17.5 crore (Rs 175 million) and a fresh equity of about Rs 27 crore (Rs 270 million) is being infused in the new entity.
The three parties in the deal, however, refused to disclose the exact stake that each would have in the new entity.
"GW Capital will hold the majority stake of over 50 per cent in the new entity," George Thomas the representative of GW Capital Pvt Ltd, said.
Trinethra's stake in the new entity is not known and can be anywhere between 26 per cent and 49 per cent with Fabmall getting a minority stake. GW, that manages the India Value Fund, has an exit option after five years.
"The new entity with revenues of around Rs 200 crore (rs 2 billion) will be one of the top three players in the grocery retail industry in India," Anjaneyulu Kakkera, managing director, Trinethra, said. While Trinethra's current revenues hover around Rs 150 crore (Rs 1.5 billion) Fabmall has revenues of Rs 35 crore (Rs 350 million).
"With this consolidation we are targeting a turnover of Rs 1,000 crore (Rs 10 billion) by 2008," Kakkera added. We are also targeting to be the number one grocery retail store in India in the near future, he said.
"We plan to open 175 new stores together by 2008 and will experiment with other retail formats like hypermarkets as well," V S Sudhakar, managing director, Fabmall said.
"Our first hypermarket that will have grocery, apparels and white goods will be opened in Vijayawada by the first week of March next year," he added. The hypermarket is likely to cover an area of around 35,000 square feet.
"This apart, we are also looking at covering two new states apart from Andhra Pradesh and Karnataka by March 2006 and four others by 2008," Sudhakar added. The consolidated entity is looking at Delhi, Mumbai, Pune, Bhubaneshwar and Bhopal for its growth plans.
Trinethra, that has close to 80 stores in operation at present is among the leading retail chains in Andhra Pradesh. Fabmall that started as an online retailer has developed 12 physical retail chain stores in Bangalore.