Amazon beefs up India logistics arm, closes in on Future Retail stake buy

Photo Credit: Reuters/Abhishek N. Chinnappa

Gearing up for a long-drawn battle in the Indian e-commerce space, global giant Amazon is beefing up its presence in the country by investing more in its logistics infrastructure and taking the inorganic route.

According to media reports, the e-tailer has pumped in an additional Rs 122 crore in its logistics arm, Amazon Transportation Services. Prior to this, the business had received an investment of over Rs 675 crore in multiple tranches.

Amazon, which has committed to invest at least $5 billion in India and has separately allocated an additional $500 million to build out its food retail business, simultaneously pumped in about Rs 100 crore (around $14 million) into its local entity, Amazon Retail India Pvt. Ltd.

Despite its losses amounting to around $1 billion in India, Amazon is seeking to add pressure on its rivals SoftBank-backed Flipkart and Alibaba-backed Paytm Mall by taking the inorganic expansion route.

According to a report in The Economic Times, the e-commerce major is set to pick up around 9.5 per cent stake in Future Retail Ltd, possibly giving it access to a larger retail client base through the Big Bazaar and Nilgiris supermarket chains and other outlets.

“Amazon, through the foreign portfolio investor (FPI) route, will buy about 9.5% stake in Future Retail and has already signed a term sheet. The deal will be announced after board approval on November 14,” said one of the sources quoted in the news report.

The deal is liked to be pegged at around Rs 2,500 crore ($338 million).

Last month, CNBC-TV 18 had reported that  Amazon.com Inc is likely to buy at least a 7-8 per cent stake in India’s Future Retail Ltd through its investment arm.

In September, Amazon, along with private equity firm Samara Capital, bought Aditya Birla Group-owned More retail chain at an enterprise value of 42 billion rupees ($568.03 million).

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