India’s Vishal Mega Mart is planning a $1 billion initial public offering (IPO) which will value the budget supermarket chain at up to $5 billion. Two individuals familiar with the plan revealed that Switzerland’s Partners Group and India’s Kedaara Capital, which hold a majority stake in Vishal Mega Mart, will sell each share in the offering.
However, the exact ownership details and the amount they plan to sell remain unclear. Vishal Mega Mart’s Chief Executive Gunender Kapur didn’t respond to Reuters’ requests for comment, and neither did Kedaara nor Partners Group.
Vishal Mega Mart Plans IPO
The retailer, which operates 560 stores mainly in smaller cities selling clothes and grocery items, competes with Indian tycoon Mukesh Ambani’s Reliance, Tata Group’s Trent, and grocery retailer Avenue Supermarts. Investment banks have been invited to pitch for the IPO this week, and the offering is likely to take place later this year, according to the sources. These plans come at a time when Indian stock markets are trading near record highs, with the benchmark NIFTY index climbing 12 percent over the last six months.
Indian IPO Market Expected to Surge Amid Economic Growth
Bankers and analysts anticipate increased IPO activity in India, fueled by rapid economic expansion and a stable political climate, with Prime Minister Narendra Modi poised for a potential third term in the upcoming elections by May.
According to a report by Fitch-owned India Ratings, Vishal Mega Mart witnessed a notable revenue surge of 36 percent to 75.9 billion rupees ($917 million) in its last financial year ending March 2023. Furthermore, its net profit soared by 60 percent to 3.2 billion rupees during the same period. Estimates from Boston Consulting Group project India’s retail market to potentially reach $2 trillion by 2033, a significant increase from the current $840 billion.
Shift in Indian Retail
Despite the growing presence of e-commerce giants like Amazon, brick-and-mortar businesses still hold sway over India’s retail sector. However, there’s a noticeable trend among consumers towards favoring chains over roadside unbranded shops, especially at the lower end of the market.
Vishal Mega Mart, renowned for its affordable offerings such as T-shirts starting from 99 rupees ($1.5) and jeans priced from $9, derives about half of its sales from apparel, as per sources. Alongside groceries, the chain also retails home appliances and luggage.
In 2018, Partners Group and Kedaara acquired Vishal Mega Mart for approximately $350 million from rival buyout firms TPG and India’s Shriram Group.
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