TPG plans to sell Vishal Mega Mart

Storied American private equity investor TPG has kicked off a process to sell India’s sixth-largest wholesale and retail chain, Vishal Mega Mart, in a deal that could value the company at over Rs 1,500 crore, a person directly aware of the matter said.TPG plans to sell Vishal Mega Mart Vishal Retail had sold its retail, franchise and wholesale businesses in September 2010 to Chennai-based Shriram Group and TPG for Rs 70 crore. Vishal Mega Mart was founded by Ram Chandra Agrawal in 2001 and it initially sold ready-made apparels. Over time, it diversified into non-apparels. Agarwal was credited with creating a value-retail chain in India. TPG plans to sell Vishal Mega Mart Vishal Mega Mart has annual earnings before ebitda (a measurement of a company’s operating profitability) of Rs 70 crore, another person with knowledge of the value retailer’s financials said. TPG is expecting Vishal Mega Mart to be valued at about Rs 1,500 crore, giving it a multiple of 20 times its ebidta, the person added. After the acquisition, the company was divided into two parts—TPG Wholesale Pvt. Ltd took control of the wholesale and franchise arm while Airplaza Retail had taken over the retail arm. Airplaza Retail is owned by Shriram Distribution Services Pvt. Ltd. TPG Wholesale was later renamed Vishal Mega Mart Pvt. Ltd. Future RetailBSE 1.38 % announced the buyout of HyperCity, a chain of 19 big-format stores, for Rs 655 crore, to increase its presence in the country. Some time ago, Radhakishan Damani, founder of D-Mart supermarkets, took control of Bombay Stores, a chain of department outlets. Since TPG’s acquisition of Vishal Mega Mart in 2010, the American firm has infused over Rs 750 crore to improve operations and strengthen balance sheet. As a result, the wholesale unit has pared losses significantly. Sales at the wholesale arm grew 17% to Rs 1,346 crore in fiscal 2016 from Rs 839 crore in fiscal 2013. Sales at the retail business also increased almost 17% to Rs 1,900 crore during the same period.