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The Kishore Biyani-promoted Future Group will rake in about Rs 420 crore by selling a chunk of its stake in Future Capital Holdings to global private equity firm Warburg Pincus.
As part of the transaction, Pantaloon Retail India Ltd and its wholly-owned subsidiary Future Value Retail Ltd will sell their shareholding (aggregating 40 per cent) in FCH to Cloverdell Investment Limited, an affiliate entity of Warburg Pincus.
The Future Group, in a statement, said it has executed agreements to sell its stake in the non-banking finance company at Rs 162 a share. At present, it holds 53.70 per cent stake in FCH. The Future Group is cutting down its debt by selling its non-core businesses, which analysts perceive as cash-cows. On April 30, the Group had announced its intention to demerge the Pantaloons retail format from Pantaloon Retail India Ltd. Post the demerger, Aditya Birla Nuvo Ltd will hold a majority stake (50 per cent) in the Pantaloon retail format.
Open offer
As per SEBI regulations, Warburg Pincus will make an open offer (to acquire 26 per cent more stake) to the existing shareholders; the details will be announced shortly. According to Mr V. Vaidyanathan, Vice-Chairman and Managing Director, FCH, if the open offer does not elicit the desired response, the Future Group will sell the remaining 13.70 per cent stake at Rs 162 a share to Warburg Pincus.
If the Future Group sells its entire 53.70 per cent stake, it will earn Rs 564 crore. Mr V. Vaidyanathan, who holds 7.6 per cent stake in FCH, will continue to head the company and Mr Vishal Mahadevia, Managing Director, Warburg Pincus, will be inducted on the FCH board.
In addition to all this, Warburg Pincus will infuse Rs 100 crore through a preferential allotment — of equity shares and/or convertible securities — in FCH.
Mr Kishore Biyani, Founder and Group CEO, Future Group, said: “This transaction is in line with our stated intention to exit from non-core businesses of Pantaloon Retail and is aimed at deleveraging and further strengthening the balance-sheet of the company.”
Exiting non-core biz
FCH is focusing largely on providing loans to micro, small and medium enterprises. It also provides gold loans, consumer durable loans, two-wheeler loans, wholesale loans, wealth management and broking services.
As on March 31, 2012, the company had made advances of Rs 4,670 crore through a network of 197 branches in 41 cities.
The company reported a 115 per cent increase in net profit at Rs. 105.83 crore in the year ending FY12, up from Rs 49.12 crore in the year ended FY-11. Shares of FCH closed 4.78 per cent higher, at Rs 143.55 per share on Monday, against the previous close of Rs 137.
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