Mumbai: IL&FS Investment Managers, a private equity arm of IL&FS Ltd, has acquired a 10% stake in The Mobile Store, an Essar group firm, for Rs100 crore, a senior executive from the retail chain said. The stake sale values Mobile Store, a mobile handsets and accessories retail chain, at Rs1,000 crore, added this person who did not want to be identified.
A spokesperson for the Essar group confirmed the transaction but declined to elaborate any further.
The chain, managed by Rewant Ruia, a scion of the Ruia family and son of Ravi Ruia, vice-chairman of the group, has been on an expansion spree.
The Mobile Store currently has 1,300 stores nationwide and revenue of Rs120 crore a month. Earlier this year, the company made its first acquisition when it bought Xcite, a consumer durables and IT goods and accessories retail chain.
The executive quoted earlier said The Mobile Store would use the funds for organic and inorganic growth.
“People who entered the market before the slowdown in the last two to three years are once again looking at aggressive growth and exit options as the market is back on the growth path,” said D. Satish Babu, managing director of Univercell Telecommunications, India Pvt Ltd, a regional mobile phone retail chain that has a presence in southern India; it has at least 300 stores and plans to add 700 more by end of 2011.
“The handsets retail market is estimated to grow to Rs45,000 crore by 2015”, said Saloni Nangia, vice-president, consumer products and retail, Technopak Advisors Ltd, up from the current Rs28,000 crore.
“Currently, less than 10% of this market is organized; however, by 2015, this segment would account for one-fourth of the overall market,” she added, explaining that the growth opportunity in mobile telephony is the largest globally, making it lucrative for handset manufacturers and retailers.
The national organized handsets and accessories retail market in India is dominated by players such as The Mobile Store, B.K. Modi-led Spice group’s Hot Spot Retails Pvt Ltd, Tata Sons’ Infiniti Retail Ltd which operates Croma, and the Kishore Biyani-led Future group’s joint venture Future Axiom, along with UAE-based partner Axiom Telecom.
Like The Mobile Store, other mobile phone retailers have been on an expansion drive too.
“A large part of this growth in the next 12 to 18 months will come from organic and inorganic growth as we look at smaller regional chains to gain scale,” Sanjeev Mahajan, chief executive officer, Hot Spot, had told Mint in an earlier interview.
In the last week of January, Hot Spot Retails acquired Global Access, which ran a chain of 30 mobile phone stores in Bangalore; this was the company’s second acquisition after the RPG group’s Cellucom which was acquired in February 2009. The company plans to open at least 100 stores every month to reach 5,000 stores in the next three years.