According to sources familiar with the matter, Vishal Mega Mart, a leading budget supermarket chain in India, is gearing up for a $1 billion initial public offering (IPO). This move is expected to value the company at up to $5 billion, with a portion of the proceeds intended for expanding its store network.
Partners Group of Switzerland and India’s Kedaara Capital, holding a majority stake in Vishal Mega Mart, are reportedly planning to divest some of their shares in the offering. However, specific details regarding the exact ownership percentages and the extent of share sales remain undisclosed at this time.
Despite repeated requests for comments, Vishal Mega Mart CEO Gunender Kapur did not respond, while Kedaara Capital and Partners Group declined to provide any official statements.
Vishal Mega Mart currently operates 560 stores across smaller cities, specializing in clothing and grocery items. Its competitors include major players in the Indian retail market such as Reliance Industries, Tata Group’s Trent, and Avenue Supermarts.
Vishal Mega Mart is moving forward with plans for its initial public offering (IPO), with investment banks being invited to pitch for the IPO this week. The offering is expected to take place later this year, according to sources familiar with the matter.
This decision comes as Indian stock markets continue to trade near record highs, with the benchmark NIFTY index showing a 12% increase over the last six months. With India experiencing rapid economic growth and a stable political environment, analysts anticipate an uptick in IPO activity, especially with Prime Minister Narendra Modi poised to secure a third term in the upcoming elections.
Vishal Mega Mart reported impressive financial performance in its last fiscal year ended March 2023. Revenues surged 36% to 75.9 billion rupees ($917 million), while net profit saw a substantial increase of 60% to 3.2 billion rupees.
The potential of India’s retail market is also significant, with estimates suggesting it could reach $2 trillion by 2033, compared to the current $840 billion. Despite the rise of e-commerce platforms like Amazon, brick-and-mortar businesses still dominate much of India’s retail sector. However, there is a notable shift among consumers towards organized retail chains from unbranded roadside shops, particularly at the lower end of the market.
Vishal Mega Mart, known for its budget-friendly offerings such as T-shirts starting from 99 rupees ($1.5) and jeans priced from $9, derives approximately half of its sales from apparel. In addition to clothing, the retailer also offers a range of products including home appliances, luggage, and groceries.
Partners Group and Kedaara Capital acquired Vishal Mega Mart in 2018 for around $350 million from rival buyout firms TPG and India’s Shriram Group.