Softlogic Holdings PLC is in talks with Agora to acquire full operation of Bangladesh’s oldest supermarket chain, the Sri Lankan conglomerate and people familiar with the matter said.
A subsidiary, Softlogic Retail Holdings (private), signed an agreement on Friday to acquire Agora, the group said in a communication to Colombo Stock Exchange (CSE).
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Softlogic, which has interests in ICT, healthcare, retail and financial services, said the deal would be through “a series of transactions, subject to the terms and conditions set forth therein and obtaining regulatory approvals”.
An official in Dhaka familiar with the matter confirmed the development but did not share the amount of the repossession being negotiated.
Agora entered talks with the Sri Lankan conglomerate after its talks with Gemcon Group, owner of Meena Bazar, another major supermarket chain in the country, broke down late last year.
Agora and Softlogic have been in discussions for a few months, according to the manager.
72.5% owned by Swedish hedge fund Brummer & Partners, managed by Frontier Fund, and the rest by Rahimafrooz, Agora began its journey in 2001 as the country’s first supermarket chain.
Known for its automotive batteries, Rahimafrooz opened its first Agora supermarket to entice shoppers with the convenience of an alternative to unorganized wet markets for purchasing groceries and other necessities.
In 2009, Brummer & Partners formed a joint venture with Rahimafrooz to expand its footprint and improve its services.
Today, Agora has 17 outlets – 14 in Dhaka and the rest in Chattogram and Sylhet.
Along with those in Agora, there are around 300 big-box outlets, including 208 from Shwapno, the country’s largest retail chain, industry insiders said.
Overall, the supermarket chains record about Tka 3,000 crore in annual turnover, which is still insignificant considering that the wholesale and retail trade accounts for only 15% of the gross domestic product of the country, depending on the operators.
Industry insiders said the sector would grow rapidly if a flat rate of Value Added Tax (VAT) was imposed on retail.
Currently, customers must pay 5% VAT on purchases in supermarkets and department stores.
But they don’t need to pay it when buying groceries at kitchen markets or neighborhood stores, a discrepancy that drives many customers away from big box stores.
Softlogic says it encompasses a multi-brand and multi-channel strategy.
Its businesses in Sri Lanka include branded clothing, consumer electronics, retail and distribution of mobile handsets, supermarkets and quick service restaurants, according to its disclosure to the CSE.
The group employs more than 11,000 people in Sri Lanka and Australia and operates an asset base of more than $750 million to generate annual revenue of more than $420 million, it says on its website.