SEBI gives nod to Future Group and Reliance Retail deal

The Securities and Exchange Board of India (SEBI) has given approval to the Future Group and Reliance Retail deal despite Amazon Inc. having had written to the regulator.

The global e-commerce giant had said that the Future Group had violated certain agreement by entering into a Rs 24,713 crore deal with Reliance Retail in August 2020. As part of the deal, the Kishore Biyani led-Future Group was to sell its retail, wholesale, logistics and warehouse business to Reliance Retail Ventures.

According to the terms of the deal, the Future Enterprises Ltd (FEL) would retain the manufacturing and distribution of FMCG goods, integrated fashion sourcing and manufacturing businesses, its insurance joint venture with Generali, and a joint venture with NTC Mills.

Amazon, on January 14, in its eighth letter over the past three months to SEBI, had asked the regulator to suspend its review of the Future-Reliance deal and not grant a no objection certification on the ground that its challenge to the agreement was before the Delhi High Court. SEBI had listed a number of conditions in accordance to the Composite Scheme of Arrangement. It also made reference to concerns raised by Amazon.

“The Company shall ensure that the shares of the transferee entity issued in lieu of the locked-in shares of the transferor entities is subjected to lock-in for the remaining period post scheme,” SEBI said. “Company shall ensure that proceedings pending before SEBI against the entities part of the promoter/promoter group or are directors of the companies involved in the scheme, should be highlighted in the scheme document filed before National Company Law Tribunal (NCLT).”

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However, Amazon, which had bought a 49 per cent stake in Future Coupons in 2019, the promoter-entity of Future Retail, has contended that as per its contract with Future, the sale of the business to certain companies, including Reliance is barred. As such, the global online retailer had written two letters to SEBI and the stock exchanges in December 2020, urging them not to issue non-objection certificates for the Future-Reliance deal. It had also cited the decision of the Singapore International Arbitration Court.