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.
Most 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.”
Sandip Ginodia , CEO
ALTIUS INVESTECH PVT LTD
We deal in over 60 unlisted companies with 15 years of experience
For latest prices visit : www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .
Email : ginodiasandip1@gmail.com
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