TPG-Shriram takeover Vishal Retail

PE firm TPG Capital and Chennai-based Shriram Group have closed the transactions to take

over Delhi-based loss-making company Vishal Retail. While TPG has acquired the wholesale and franchise undertaking of Vishal Retail, Airplaza Retail Holdings, a part of the Shriram Group, has acquired the retail undertaking. TPG will invest Rs 200 crores into TPG Wholesale to fund the turnaround of its business and future growth. The TPG-Shriram combine had earlier struck a deal to take over Vishal Retail in September, after nearly a year of negotiations. These business transactions follow Vishal’s debt restructuring program, which started in November 2009 under a CDR process led by SBI on behalf of certain lenders of the public listed retail company. These transactions have been earlier approved by the board and shareholders of Vishal and accepted by all of its bank creditors.

Vishal Retail’s efforts to fund its ambitious expansion plan with borrowings left the company with huge outstanding debts and inventory during the economic recession, eventually requiring a corporate debt restructuring of Rs 730 crores. Vishal’s main money lenders include SBI, HDFC Bank and ING Vysya Bank, who have now given the company the go-ahead for this new joint venture. For the quarter ended December, the company had a net loss of Rs 19.37 crores. The main challenges ahead for the new JV will be to rationalize operations, portfolio of products, identify the target clientele and consolidate in one year before opening new stores.