KKR, Bain Capital, and TA Associates compete for a stake in Aditya Birla Retail

By

Isabelle Crossley

Published
Nov 8, 2017

​Aditya Birla Retail is looking to sell a 12 to 13 percent stake in the company and a group of private equity firms are currently in negotiations concerning who will pick it up.

At present, private promoter entities of Aditya Birla Retail, including Aditya Birla Group holding companies Kanistha Finance and Investments Private and RKN Retail Private collectively own 99.99% of Aditya Birla Retail. However, this looks set to change with this coming sale as the private equity firms KKR, Bain Capital, and TA Associates are vying for a 12 to 13 percent stake in the business. It is also believed that this deal could catch the attention of other private equity firms who may then also be interested in investing.

Aditya Birla Retail has achieved store-level Earnings before Interest, Taxes, Depreciation, and Amortisation (EBITDA) and operational profitability is anticipated within the next 15 months during which time 131 store launches are planned. Funds raised by this round of investment could cover the business’ capital expenditure for the next two to three years and so would be a major boost to the company.

Aditya Birla Retail encompasses the supermarket and hypermarket subsidiaries of the Aditya Birla Group which include fashion, beauty, and food. According to Harminder Sahni, the Founder of Wazir Advisors, a retail consulting firm, “The food and grocery segment is very attractive from an investor’s point of view because of the scale one can achieve and the capacity for the business to absorb capital.”

Sahni went on to say: “D’mart’s IPO [initial public offering] has set a valuation benchmark that has resulted in heightened investor appetite and as companies like [Aditya Birla Retail’s] More turn profitable, they are bound to attract significant investor attention.” As large, multi-brand stores rise in popularity and profitably becomes possible, it is likely investors will continue to fuel their rise.