Food and grocery retail chain Subhiksha is in the final stages of discussion with leading financial investors to raise nearly $100 million (Rs 447 crore) to fund its durables retailing plans. The deal is expected to be sealed in the next two weeks, sources involved in the transaction said.
Recently, IT czar Azim Premji bought a 10 per cent stake in Subhiksha through his personal investment arm for nearly Rs 230 crore, valuing the retailer at Rs 2,300 crore. Premji’s firm purchased this stake from ICICI Venture. However, this time around, Subhiksha promoters are expected to issue fresh equity to investors and expect the valuation to be around Rs 3,800 crore, sources said.
Subhiksha Managing Director R Subramanian could not be contacted for comments. Subhiksha has plans to retail in consumer durables and electronics mainly in Tier-II and III towns in the country, covering an estimated 2 million sq ft of space.
The company has targeted to set up nearly 100 stores - where the store size will range from 15,000 sq ft to 20,000 sq ft - over the next three to six months. In June 2008, Subhiksha acquired 40 per cent stake in Chennai-based non-banking finance company (NBFC) Blue Green Constructions and Investments for Rs 2 crore. Blue Green had plans to enter consumer durables retailing and identified certain properties for the venture, which led Subhiskha to buy the company.
“We want to enter the consumer durables space in a big way and Blue Green also had similar plans. Though they have not opened any outlets, they have identified some properties and built initial systems. They needed funds and we thought that it was a good strategy to buy them,” Subramanian said in June, after announcing plans to acquire Blue Green.
Subhiksha plans to invest Rs 800 crore in the current financial year to expand its network to 2,200 stores from the current 1,500 and add consumer durables to its product portfolio.