Shriram Group may take over Vishal Retail arm-report

MUMBAI: Chennai-based Shriram Group is likely to take over the cash-strapped front-end retail arm of Vishal Retail Ltd after private equity investor Texas Pacific Group (TPG) takes charge of its wholesale division, the Business Standard paper said on Tuesday.

An associate company of Shriram Trust, which owns Shriram Capital, the Group's holding company, was likely to be the vehicle for this initiative, the paper said citing three unidentified persons involved with the deal. The Shriram Group will initially pump in 500 million rupees and invest more as and when the capex requirement arises, the report said, adding the retail company will enter into different lease agreements to consolidate and expand the business.

Vishal Retail officials could not be reached immediately for comments when contacted by Reuters. Delhi-based Vishal Retail had announced last month that TPG will be a strategic investor in the firm. The firm has been looking to raise funds for more than a year to cut its 7.35 billion rupees debt. The retailer ran into difficulty in late 2008 after it failed to raise equity amid an economic downturn which also hit sales. Vishal Retail had also said in June that while TPG would set up the wholesale company some other Indian investors will form a retail company.

TPG has agreed to make an upfront payment of 2 billion rupees in the new wholesale company and also put in an additional 3 billion rupees for funding future growth requirements, Tuesday's Business Standard report said.