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Reliance-Future deal to keep Biyani and his family out from retail space for 15 years

New Delhi | Mumbai: Kishore Biyani and his family members are barred from re-entering the retail space for the next 15 years under a non-compete clause as part of Reliance Retail’s buyout of Future Group’s assets, said two people with knowledge of the matter.“As per the deal contours, neither Biyani nor his immediate family members can operate in any retail segment,” said one of the persons. “There is, however, an exception, of home retailing, where Reliance has no presence so far. The deal is applicable for all existing retail businesses both online and offline.”Biyani owns Praxis Retail, a separate entity that runs about 48 HomeTown stores with a revenue of Rs 702 crore in the last fiscal. It isn’t part of the deal with Reliance. Reliance Retail and Future Group did not respond to queries. 77902055Most non-compete agreements run for three-five years but financial compulsions may have led to a longer period, experts said. “It is also fairly common for the old management to continue after the acquisition,” said Ashish Kumar Singh, managing partner of Capstone Legal.Past Cases of Promoters’ Return“But in this case, we believe it is not possible for Biyani management to continue under Reliance,” he said.India has seen entrepreneurs competing against brands they’ve sold. For instance, apparel brand Biba’s co-founder Sanjay Bindra started new label Seven East a month after selling his stake. Similarly, the co-promoter of Paras Pharma, who sold most of his stake to private equity firm Actis in 2006, resurfaced in 2010 with personal care company Vini Cosmetics. Anchor Electricals’ promoters, who sold the business to Panasonic, started the GreatWhite electrical accessories business, but only after the three-year, non-compete clause ended.“If it (non-compete clause) is for 15 years, then it means Biyani has no interest in doing retail business ever,” said Harminder Sahni, founder of retail consultancy Wazir Advisors. “If you read Biyani’s viewpoint over the last few years, he is always talking about brands and not retail. Fifteen years means that he would do something else in life. And for how long can one keep doing retailing? Kishore Biyani is not just a retailer – he is a businessman.”

from Economic Times https://ift.tt/3gTeihw

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