Mumbai: Future Retail is in talks with a consortium of investors led by Premji Invest to sell a stake in the retail chain, even as it is continuing parallel discussions with Reliance Retail, Amazon and Samara Capital for a deal, said two people privy to the matter.
Founder Kishore Biyani is looking to either sell a significant or his entire stake in his flagship retail firm that is facing a liquidity crisis with mounting debt.
Premji Invest already owns an about 6% stake in Future Retail, while Amazon has about 3.2%. “Premji Invest is looking to increase its stake,” said one of the people. It is also trying to bring in other investors on board and collectively raise funds, he said.
While these investors including Samara have already signed term-sheets to buy a non-controlling stake in Future Retail, talks with Reliance Retail includes offering a majority stake in Future Lifestyle Fashion, which runs the Central department chain, said the second person, adding: “A Reliance deal will mean Biyani has to lose control at the group level.”
Premji Invest and Future Retail didn't respond to emails seeking comment till press time Friday, while Samara Capital declined to comment.
“As a policy, we do not comment on media speculation and rumours,” said a Reliance Industries spokesperson, adding: “Our company evaluates various opportunities on an ongoing basis.”
Big Bazaar hypermarkets contribute about 80% to Future Retail’s revenue. Many of its stores had to shut or significantly limit operations after the government imposed the nationwide lockdown in late March to contain Covid-19. While this has worsened the situation, the financial stress on the company and the Future Group had begun before the pandemic.
The total debt at the Future Group’s six listed firms rose to Rs 12,778 crore as of September last year from Rs 11,463 crore at the end of March 2019. About 42% of the company is owned by Biyani through Future Corporate Resources and Future Coupons. However, nearly 75% of that shareholding is pledged to lenders.
In March, Future Corporate Resources, Biyani’s holding company, defaulted on debt payments resulting in IDBI Trusteeship Services invoking pledged shares in Future Retail.
The group, however, is trying to get a 12-month forbearance on share seizures. Since February, its market value has dropped to less than a third. The holding company has debt repayment obligations of Rs 1,045 crore for the next two years.
Get Unlimited Access to The Economic Times
