Kishore Biyani to sell Future Supply Chain, puts debt reduction on fast track
Kishore Biyani, faced with debt concerns and high promoter pledge, is looking at all possible options for equity fundraising. A non-core asset sale is on top of the list. After announcing plans to exit the insurance business, Future Group has put the logistics arm, Future Supply Chain on the block.
Kishore Biyani-promoted Future Group has put its logistics arm, Future Supply Chain on the block, sources told CNBC-TV18. Recently, the Future Group had announced plans to exit its insurance joint ventures. These moves are part of the group's efforts to sell non-core assets to repay loans to banks and redeem shares pledged with other lenders.
CNBC-TV18 has learnt that Warburg Pincus backed Stellar Value Chain, Delhivery, Mahindra Logistics could be the likely strategic players interested in a stake in Future Supply Chain. PV Sheshadri, CEO of the company, resigned last month, and people in the know have linked it to the impending stake sale.
Nippon Express owns 22 percent in the company, having acquired it in September 2019 at a lofty Rs 664 per share. Since then, the stock has shed two-thirds of its value, closing at Rs 120.65 on Thursday, up 5 percent over the previous close.
Sources said Nippon Express is also exploring getting a Japanese partner in the company to provide an exit to the Future Group.
In other plans to reduce the Future Group debt of over Rs 10,000 crores, Kishore Biyani, who holds 90 percent in many of the entities, is said to be seeking funding from existing investors like Amazon and Premji Invest.
There is speculation of e-commerce giant Amazon buying a large stake in Biyani’s crown jewel, Future Retail. Amazon indirectly owns a 3.6 percent stake in Future Retail by way of its investments in Future Coupons.
Future Group and Amazon have an agreement in which Amazon can buy a larger stake in Future Retail between 3-10 years of its investments if government norms permit. Amazon invested in Future Group just last year.
Given the backing of Amazon, Future Retail may attract some other private equity investors which could provide the much-needed equity capital to the debt-laden group.
Future Group recently got relief from the courts which restrained lenders UBS, IDBI Trusteeship from invoking the pledge on Future Retail shares, supporting the company's plea that the COVID-19 crisis had caused the stock price to collapse.
However, experts caution that the revival of the retail business post-lockdown will be critical for the Future Group. Lenders with pledged shares will look at the ability of the promoter to raise funds to decide on how aggressively they need to act to recover their money.
First Published: May 7, 2020 5:16 PM IST
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