Private equity firm TPG Wholesale Private Ltd (TWPL) and the Chennai-based Shriram Group have come together to give Delhi-based retail chain Vishal a fresh lease of life.
TPG-Shriram on Monday concluded transactions to buy Vishal’s wholesale and franchise business.
The Vishal Megamart chain comprising over 150 stores is popular in smaller cities and towns, and with this cash deal of Rs 70 crore TPG and Shriram will absorb Vishal’s liabilities rendering it debt free.
TPG has also lined up investments of R200 crore to fund the turnaround of Vishal’s business.
“Pursuant to the transfer of retail undertaking to Airplaza Retail (the company owned by the Shriram Group) and the wholesale undertaking to the wholesale company (TWPL) on a slump sale basis for a lump sum consideration, the company will receive an aggregate cash consideration of Rs 70 crore from Airplaza Retail and the wholesale company,” Vishal Retail said in a statement.
TPG did not respond to queries on how the JV plans to address Vishal’s troubles.
Analysts pointed out that the small deal size has to do with the depletion of inventory value.
With this deal TPG Wholesale will operate back-end sourcing, merchandising, logistics and franchise operations, while Airplaza Retail will operate the retail shops alongside the other franchisee partners currently operating Vishal-branded stores.