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March 13, 2024

Vishal Mega Mart Eyes $1 Billion IPO: Partners Group and Kedaara Capital Set to Offer Shares

Vishal Mega Mart, a prominent budget supermarket chain with a stronghold in smaller Indian cities, is gearing up for a significant move with plans to launch a $1 billion initial public offering (IPO). Reports indicate that Switzerland’s Partners Group and India’s Kedaara Capital, holding a majority stake in the retail giant, are poised to divest shares in this offering, potentially valuing the supermarket chain at an impressive $5 billion.

The anticipated IPO aims to fuel Vishal Mega Mart’s expansion strategy, with a portion of the proceeds earmarked for the addition of more stores across the country. Sources cited in a Reuters report suggest that Partners Group and Kedaara Capital, who acquired Vishal Mega Mart for approximately $350 million in 2018 from TPG and Shriram Group, are preparing to sell shares, although specifics regarding their stake disposition remain undisclosed.

With 560 stores retailing a wide array of clothing and grocery items, Vishal Mega Mart has entrenched its presence in the Indian retail landscape, particularly in underserved markets. Investment banks have reportedly been approached to present pitches for the IPO, signaling an imminent milestone for the company, expected to materialize later in the year.

Recent financial performance underscores Vishal Mega Mart’s growth trajectory, with India Ratings reporting a remarkable 36% surge in revenues to $917 million in the fiscal year ending March 2023, accompanied by a robust 60% increase in net profit. The retailer’s product offerings span apparel, home appliances, luggage, and groceries, with a significant emphasis on affordability. Shoppers can acquire items such as T-shirts for as low as Rs 99 and jeans for under Rs 800, making it a preferred destination for budget-conscious consumers.

The timing of Vishal Mega Mart’s IPO announcement coincides with buoyant sentiments in the Indian stock markets, which have been scaling record highs. The NIFTY index’s 12% ascent over the past six months underscores investor confidence amid the nation’s rapid economic growth and a conducive political environment. With Prime Minister Narendra Modi anticipated to secure a third term in the forthcoming elections slated for April-May, market observers foresee heightened IPO activity, buoyed by the optimism surrounding India’s economic outlook.

In summary, Vishal Mega Mart’s foray into the public markets signifies a pivotal juncture for the budget retail sector in India, underpinned by robust financial performance and expansion ambitions. As the company embarks on this landmark journey, stakeholders await eagerly to witness the unfolding chapters of its growth story amid a dynamic economic landscape.

 

Jhumpa Lahiri

Jhumpa Lahiri

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