CHAITALI CHAKRAVARTY & BHANU PANDE NEW DELHI
\n[ THURSDAY, OCTOBER 19, 2006 01:44:20 PM]<\/b><\/p>\n
CALL it the Reliance effect! The retail boom has sent the aspirations of small regional retailers\nsoaring. Delhi-based pharmacy chains, Guardian and 98.4, garment retailer Ritu Wears and\nBombay Selections, department store Big Jo’s , VMart , Gokul Mart and SRS, South Indian\ndurables retail chain Viveks are all engaged in talks with banks, high networth individuals (HNIs)\nand private equity funds to raise money for expansion. Not surprisingly, scores of terms sheets and\ninvestment seeking proposals are floating in the market.<\/p> \n
For instance, Guardian Life Care is looking to raise $20m and is in talks with a few PE firms. “We\nwant to put in place 2,000 – 3,000 outlets in the next five years and the fund we are raising will help\nimplement our first phase of expansion (600-700 outlets),” says Ashutosh Garg, CMD, Guardian\nLife Care. Similarly, South Indian durables retail chain, Viveks, wants to raise around Rs 150 crore\nto complete its expansion in the South . Subsequently, it has plans to go for an IPO to fund its pan\nIndia expansion. Gokul Mart and Bombay Selection are looking for funds to open 10 new stores. \nSmall retailers have sought the help of financial consultants who can devise innovative ways to\nraise funds. Says Jyoti Gadia , director of Resurgent India, a management and financial\nconsultancy, which has the mandate from six retailers to tie-up funds, “Banks put forth too many\nconditions on small players. Under such circumstances , we have to look at new ways of raising\nfunds. Credit card securitisation is one of them.” According to him, many HNIs have also shown\ninterest in the retail sector. “Some of the retailers want only Rs 25-30 crore to help them open the\nfirst few stores and that’s not much for an NRI,” says an industry source.<\/p> \n
Even private equity players find the sector interesting as most retailers are no longer single store\nentities. As they show reasonable scalability, PE firms see a clear exit prospect,” says Devangshu\nDutta, CEO, Third Eyesight, a retail consultancy. “On the other hand, small retailers are finally\nshowing appetite for external investors and willingness to share ownership.”<\/p> \n
For instance, last month PE fund Actis invested $65m in the Nilgiri’s group, a South Indian food\nbrand. GIC Special investments from Singapore has joined Actis in making this investment. The\nfunding provided by Actis will be used to expand the company’s South Indian franchise network\nand strengthen its supply chain and distribution capacity as well as to expand the group’s food\nmanufacturing operations.<\/p>\n\n
Reliance books prime space in Ansal malls<\/b><\/p> \n
New Delhi: With the fight for retail space heating up, Reliance Industries, which has major plans for\nthis sector, has reached an understanding with Ansal Properties and Infrastructure (APIL) for\ntaking up the anchor space in the real estate major’s upcoming mall projects, report Mayur Shekar\nJha & Joji Thomas Philip. According to sources, the first of the deals has already been signed,\nunder which Reliance Retail will be the anchor tenant in the upcoming Ansal Plaza malls in Greater\nNoida and Palam Vihar, Gurgaon. Even as sources confirmed the development , this comes as a\nblow to Shoppers’ Stop, which is currently the anchor tenant in most of the Ansal Plazas. This\nmove also assumes importance considering that APIL has already outlined plans to build about 18\nnew malls, most of which would be located in tier II and III cities. “With Reliance Retail too actively\ntargeting these cities, the company can now ride on the APIL’s infrastructure,” sources added.\nWhen contacted, an Ansal Properties and Infrastructure (APIL) spokesperson said, “We are\nhopeful of a long lasting relationship with Reliance, but there is no formal agreement as such.”<\/p>\n\n
Source: The Economic Times<\/a><\/p>\n\n