More prominently known as the ‘ever-vocal guy against Indian eCommerce’, Kishore Biyani has found interest in the very same domain, which he used to propagate his PR levels to an all-time high. His company, Future Group, is in final stages to acquire the Rocket Internet-backed online furniture marketplace FabFurnish.
Financial details of the deal remain undisclosed however two people familiar with the matter told Livemint that Future Group may pay anywhere between 15-20 crores in cash for the deal.
This marks the first acquisition of a consumer internet company by Kishore Biyani and also the first exit for Rocket Internet which has been looking to sell some of its Indian investments (Jabong, Foodpanda) for quite some time now*.
Future Group already owns a furniture and home furnishing brand called HomeTown which has its presence in 20 cities through 40 HomeTown stores. Post acquisition, the whole management team of FabFurnish including 100 odd employees will join HomeTown but continue to look after the online retail business of the company.
Under the FabFurnish brand, the group plans to expand the presence of HomeTown all over India wherever they do not have offline stores.
We will leverage FabFurnish’s online platform and delivery model to grow our presence in markets where we do not have offline stores or have minimal reach,
said Kishore Biyani, Chief Executive Officer of Future Group.
According to Biyani, HomeTown is set to become an 800-1000 crores business by the end of the current financial year. This acquisition will also prepare them for the eventual competition from the Swedish furniture retailing giant IKEA, which is expected to enter India next year. Biyani expects the combined entity to achieve an EBITDA of Rs 40 crore-Rs 50 crores in the current fiscal.
FabFurnish was founded in 2012 and can be considered as one of the early entrants in the online furniture segment. Initially, it also used to sell private labels on its platform besides promoting merchants.
Last year, after the founders Mehul Agrawal and Vikram Chopra quit the company to start their own ventures, FabFurnish shifted to solely marketplace model. It also fired almost 25% of its workforce and vacated its warehouse towards cost cutting and improve the financial health.
However, the company eventually failed to sustain its business amid stiff competition from the other heavily funded ventures such as Pepperfry, backed by Goldman Sachs and UrbanLadder backed by Sequoia Capital & Ratan Tata.
*That statement, though of course true, has irked up a few Rocket Internet loyalists. For that very reason, Saurabh Kochhar, CEO, foodpanda India said in a statement to us, that the company has no plans to exit from the Indian market and confidently remains market leader in the online food segment.
We are extremely happy with the development of our business in India. We are a global player in food ordering business, backed by a group of renowned investors. Whenever we have felt the need for investments we have invested and we will continue to do so. We have achieved an outstanding rate of automation in India and have built incredible technological innovations that have dramatically improved our order processing, vendor management and delivery rider allocation.
He further added,
Marketplace business generally require many years to turn profitable, we are happy to see this happening even faster at foodpanda. Online food ordering is one of the most profitable internet business models and we are proving so in India as well.
Sure Saurabh. We look forward to that. Cheers!