Vishal Retail is on the verge of closing a deal with Texas Pacific Group (TPG), a private equity fund in about a couple of months to raise funds and reduce its debt. It may also opt for other Indian investors
In late 2008, Vishal Retail got into deep debt of Rs 735 crores when it failed to raise equity during the economic downturn. This affected its sales. It runs a chain of 170 stores across the country.
It is learnt that TPG, the private equity firm will set up a wholesale company while other investors will form a retail company. The assets and liabilities of Vishal will be transferred to the wholesale company on a slump sale basis. Vishal Retail will cease to exist after the deal.
Besides the TPG option, Vishal is also considering raising funds through stake sale to Indian investors. A court ruling last month, which came in response to a petition by Singapore’s lender DBS Bank, bars Vishal from selling assets till November.
Vishal retail, reported a loss of Rs 414 crore in 2009/10. The company forecast sales of Rs 350-375 crore for April-June quarter and Rs 1,500-1,800 crore for 2010-11. The company reported sales of Rs 1,100 crore in the last financial year.