Future Group may exit global joint venture

Kishore Biyani-owned Future Lifestyle Fashions may be planning to exit some of its international joint ventures (JV) but not until it gets the ‘right’ valuation.

Celio India, the equal JV between Future Lifestyle Fashions and a French retailer, is hoping to acquire the balance stake of its JV partner. But the takeover may not be easy, as valuation perceptions may differ between the partners. Much as foreign apparel brands want to avail of single-brand retail norms where they raise the stake up to 100 per cent, their JV partners may not exactly be willing to let them go.

Kishore Biyani, Chairman, Future Group, said, “There is already a pre-decided valuation fixed for the JV and we will exercise that option as we want to get the right valuation for the business. The purpose is always to enter at a low price and exit at a higher valuation. The decision to exit the JV will be taken only next year, after March, as we are still negotiating with Celio.”

Meanwhile, the French menswear brand claims to have got the Foreign Investment Promotions Board’s clearance for raising stake in the JV. Marc Grosman, the owner of Celio International, said, “We have got FIPB clearance for raising stake up to 100 per cent in the JV. India is a growing market for menswear and we have been growing at 17 per cent for our like-to-like stores.” Despite being present in India for the past four years, the brand has yet to break even.

Of late, Future Lifestyle Fashions has been busy picking up minority stakes in a host of small companies. “We are already negotiating with five companies, which include footwear companies such as Famozi and Coupon stores,” said Biyani.

With intentions of building the fashion business after selling Pantaloons, Biyani is creating his fashion portfolio on the back of his private labels and formats, such as Central and Brand factory.

Picking up minority stakes in smaller companies and hand-holding them till they gain scale is also an ongoing exercise for the group. In the recent past, it exited its investments in apparel companies, such as AND and BIBA.

There is also speculation about the Future Group evincing interest in taking over the South-based departmental chain Nilgiris, to add scale to its own formats, such as KB’s Fair Price. However, the company is not willing to go on record to confirm this market speculation. “We will be ready to talk about the deal only later,” said Biyani.

Considering the Future Group has reduced its debt considerably, it is now in a position to make more investments, both in apparel and food companies.

purvita@thehindu.co.in

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