Amazon Inc., the multinational e-commerce giant is reportedly willing to support its debt-laden partner Future Group in bringing in a strong, stable investor if the latter calls off its Rs. 24,700 crore deal with Reliance Retail Ventures Ltd (RRVL). Amazon which holds 49 percent stake in Future Coupons Pvt. Ltd (FCPL), the holding company of the then Kishore Biyani-owned Future Group, helped the latter by bringing in new strategic partners and investors to deal with its swelling debt crisis.

The information is accumulated from two people who are aware of the firm’s plans. One of the people cited above also stated that even after filing a legal case against Future Group for breaching a non-compete clause in the Future Coupons pact, Amazon is open to helping Future Group get a new investor. Amazon’s offer to help Future stems from the concern that the RIL-Future deal may significantly increase the competition for Amazon in India. While Mukesh Ambani-headed RIL is eyeing the online retail space that is dominated by Amazon India and Flipkart, the US giant has been trying to build its presence in the offline retail space to complement its strong online presence.

Amazon, along with private equity fund Samara Capital, acquired the supermarket chain, More, from the Aditya Birla Group in 2018. Through More and Future Group’s local outlets of Big Bazaar, fbb and so on, Amazon is able to offer a wide range of local merchandise products at cheap rates and deliver them at the buyer’s doorstep as fast as within a day. “Future Group will be catering faster to RIL’s JioMart customers and not Amazon’s if the deal happens. This will put Amazon’s business at stake and make Amazon’s holding in Future Coupons redundant,” stated one of the person.

Amazon’s offer to help Future stems from the concern that the RIL-Future deal may significantly increase the competition for Amazon in India

In 2019, due to FDI curbs in retail, Amazon could not have bought a majority stake in Future Retail. Hence, it bought 49 percent in FCPL for around Rs. 1,430 crore, which gave Amazon a minority stake in Future Retail. The American online retailer has already approached the Singapore International Arbitration Centre. Amazon said despite being owning a stake in Future Coupons, it was not given the Right of First Refusal (RoFR) in the RRVL-Future Group deal. This August, Future signed a deal with RIL to sell its retail, wholesale, logistics and warehouse businesses. This prompted Amazon to file a legal case against Future at the Singapore International Arbitration Centre (SIAC).

On 16 October, at the first SIAC hearing on the matter, Amazon’s lawyers objected to the RIL-Future deal on the grounds that it violated Amazon’s 2019 pact with Future, which specifically bars it from tying up with RIL. In a non-compete clause in the 2019 agreement, Amazon listed RIL among 30-odd entities with which Future Group was barred from entering into any share-sale agreement without Amazon’s consent.

During the hearing at SIAC three main points of contention emerged, which were: alleged breach of the non-compete clause; alliance with RIL without Amazon’s consent; and Amazon’s recent efforts to bring in other potential investors for Future Group to help it deal with debts. In return Future Retail argued that its deal with RIL did not breach any contract because Amazon’s deal is with FCPL, which is a separate entity. Future Retail also stated that the decision to enter a deal with RIL was taken by the board of Future Retail and not by the promoters alone. Even if SIAC only allows Amazon to seek damages for breach of contract, it will likely delay the RIL-Future deal, which will aggravate the debt problems for Future Group.