According to two persons with direct knowledge of the proposal, Vishal Mega Mart, an inexpensive grocery chain in India, is preparing a $1 billion initial public offering. The plan values the company at up to $5 billion, with a portion of the revenues designated for store expansion.

As per the people, who asked not to be named because the talks were confidential, Partners Group of Switzerland and Kedaara Capital of India, which together own a majority investment in Vishal Mega Mart, will each sell shares in the deal.

The specific percentages of the two private equity groups' ownership in Vishal Mega Mart, the amount they would sell, and whether they would keep a majority stake were not immediately apparent.

Gunender Kapur, the chief executive of Vishal Mega Mart, did not reply to calls for comment from Reuters. While Partners Group declined to comment, Kedaara likewise remained silent.

The business sells groceries and clothing in 560 locations, most of which are in smaller communities. It faces competition from Tata Group's Trent, supermarket store Avenue Supermarts, and Indian businessman Mukesh Ambani's Reliance.

Furthermore, people said that investment banks have been asked to submit pitches for the IPO this week, and the sale is probably going to happen later this year.

The proposals are being announced at a moment when the benchmark NIFTY index has increased by 12% over the previous six months, and Indian stock markets are trading close to all-time highs.

With India's economy expanding quickly and the political climate steady, bankers and analysts predict that initial public offering (IPO) activity will pick up steam. Prime Minister Narendra Modi is expected to easily win a third term in the May election.

According to a research by Fitch-owned India Ratings, Vishal Mega Mart's net profit increased by 60% to 3.2 billion rupees ($917 million) during its most recent fiscal year, which concluded in March 2023. The company's revenues increased by 36% to 75.9 billion rupees.

Based on predictions from Boston Consulting Group, the retail market in India might reach a value of $2 trillion by 2033, from its current value of roughly $840 billion.

Despite the growth of e-commerce sites like Amazon, brick and mortar stores still account for the majority of the nation's retail sector, and customers are moving from roadside unbranded stores to chains at lower price points.

An estimated half of Vishal Mega Mart's sales come from clothes, as the store offers T-shirts for 99 rupees ($1.5) and pants for $9. In addition to groceries, it also sells baggage and household equipment.

For roughly $350 million in 2018, Partners Group and Kedaara purchased Vishal Mega Mart from competing buyout companies TPG and India's Shriram Group.