AMZN Amazon.com Inc

By Corinne Abrams 

MUMBAI -- Amazon.com Inc. has upped the ante in its battle with Walmart in India, by joining forces with a local private-equity firm that is acquiring one of the largest retail chains in the South Asian nation for more than $500 million, a person familiar with the matter said.

The deal could give Amazon a stake to the more than 500 stores of Aditya Birla Retail, which runs the More chain supermarkets and hypermarkets and comes just months after Walmart paid $16 billion for a 77% stake in one of India's top e-commerce sites, Flipkart.

Amazon has invested in an arm of Samara Alternative Investment Fund, an Indian investor, which taking over the More chain, said the person familiar with the deal. The deal had an enterprise value of around 42 billion rupees ($583 million), another person familiar with the matter said.

The person didn't know what stake Amazon will end up holding in the chain but local regulations would restrict Amazon from owning 51% or more of a local retailer.

An announcement at the Mumbai stock exchange Wednesday said the Samara subsidiary, Witzig Advisory Services, had bought a 99.99% stake in Aditya Birla Retail from the entities that controlled the shares.

The deal could give Amazon an important foothold in one of the world's last great untapped retail markets. Access to More's customers, data and outlets could help it better understand and deliver to India's population of around 1.3 billion people.

The Indian e-commerce market is set to exceed $100 billion by 2022, a report from PwC India and the National Association of Software & Services Companies said. In the groceries market, e-commerce companies face tough competition from other big Indian supermarket chains as well as millions of mom-and-pop stores that most Indians use for their everyday needs.

Aditya Birla Retail's revenue was 41.94 billion rupees for the year ended March 31, 2017, compared with 35.09 billion rupees a year earlier, the latest balance sheets filed with the country's Ministry of Corporate Affairs showed. The company lost 990 million rupees in that period, compared with a loss of 1.68 billion rupees a year earlier.

Samara executives didn't respond to requests for comment. An Aditya Birla Group spokeswoman declined to comment beyond what was in the release at the exchange.

Amazon founder Jeff Bezos has pledged to invest $5 billion in India, and the company looks set to go head-to head with Walmart both on and offline.

The investment in the firm that bought Aditya Birla Retail complements Amazon's last bet in the space -- a 5% stake in Indian department-store chain Shoppers Stop Ltd. The new investment could provide the company with much-needed physical space and access to an established supply chain.

"Amazon is going to be open on all the retail opportunities in India," said Abneesh Roy, an analyst at Mumbai-based Edelweiss Securities. "This is part of the omnichannel strategy of Amazon."

Despite the country's large population and growing middle class, India has long been known as a tough place to make money for global retailers. Government restrictions, overburdened infrastructure and surprisingly expensive retail rents make it difficult for even the retail giants here.

The companies investing in India -- IKEA just opened its first outlet in India last month, for example -- see it as a long-term bet on the eventual emergence of a new consumer class and room to grow in mobile adoption and online retail.

--Debiprasad Nayak and Rajesh Roy contributed to this article.

Write to Corinne Abrams at corinne.abrams@wsj.com

(END) Dow Jones Newswires

September 20, 2018 08:36 ET (12:36 GMT)

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