Global e-commerce giant Amazon will acquire a 49 per cent stake in Future Coupons, the promoter entity of Future Retail.

Kishore Biyani’s Future Retail runs more than 1,600 stores across food, grocery and general merchandise, including the popular Big Bazaar brand.

“Amazon has agreed to make an equity investment in Future Coupons Limited for acquiring a 49 per cent stake, comprising both voting and non-voting shares,” Future Retail said in a release to the exchange.

As part of the agreement, Amazon has been granted a call option. This call option allows Amazon to acquire all or part of the promoters’ shareholding in Future Retail and is exercisable between the third and tenth years, in certain circumstances, subject to applicable law, the company said.

Existing rules allow 51 per cent FDI in multi-brand retail. Further investment by Amazon in Future Retail would be shaped by the prevailing rules on multi-brand retail, sources said.

Future Retail on August 12 had informed the bourses that the promoter family of the company and Future Coupons had entered into a shareholder agreement that lays down the rights of the promoter family and Future Coupons vis-a-vis the company.

The shareholder agreement states that Future Coupon holds around 4 crore warrants in the company which when exercised, will translate into a 7.3 per cent stake in Future Retail. The share of the promoter family in Future Retail is 47.02 per cent. Besides, the existing shareholders and Future Coupons Limited are part of the promoter and promoter group of the company.

The deal will help Amazon further strengthen its foothold in the Indian market where it already operates an online marketplace. The discussions between the two players have been going on for a few months.

However, the talks seemed to have been halted after the Indian government tightened FDI rules for e-commerce marketplaces earlier this year.

The new regulations bar online marketplaces with foreign investments from selling products of the companies in which they hold stakes, and ban exclusive marketing arrangements.

Also, the inventory of a vendor will be seen as controlled by the marketplace if over 25 per cent of the vendor's purchases are from the marketplace entity, including the latter's wholesale unit. The discussions restarted some weeks ago and the final contours are now being drawn, another source said. Amazon already has stake in Shoppers Stop and More. Future Retail would be Amazon's third investment in the Indian brick-and-mortar retail ecosystem. In 2017, retail major Shoppers Stop had announced raising Rs 179.26 crore from Amazon.com Investment Holdings LLC through an issue of equity shares, which translated to just over 5 per cent shareholding for the American company. In September last year, Amazon said it has co-invested in Witzig Advisory Services, the entity which had acquired Aditya Birla Retail's 'More' chain of stores in India. A deal with Future Retail will also help Amazon compete more aggressively against Walmart-backed Flipkart as well as Mukesh Ambani's proposed e-commerce venture. For Future Retail, the transaction could prove beneficial as it will give the brick-and-mortar chain access to funds as well as expertise for strengthening its own online presence. As of June 2019, the promoter and promoter group held 47.02 per cent share in Future Retail, which operates hypermarket and supermarket under brands which include Big Bazaar, Easyday, Foodhall, HyperCity, FBB, Heritage fresh, ezone and WH Smith.