Kishore Biyani-led Future Group is one step closer to finalising a stake sale in its retail business as it is in talks with three players — Reliance Industries, Samara Capital and Premji Invest. According to Bloomberg, Reliance Industries is closing in on the deal.
However, persons familiar with the deal told TNM that Future Group is equally considering all three proposals and an announcement can be expected before the end of the month.
“No decision has been taken on which proposal to go with. Future Group is in talks with all three companies. As with Reliance, the probability is equal with the other two parties as well. The deal should close by next week,” the person said.
Future Retail is Kishore Biyani’s retail venture that runs supermarket and hypermarket format stores including BigBazaar, Fashion BigBazaar (FBB), FoodHall, Hypercity, Easyday stores, Heritage Fresh, Ezone, among others.
There were reports last week that Future Group’s Future Retail was in talks with several suitors for a stake sale including private equity firm Samara Capital and a consortium led by Wipro founder Azim Premji’s family office Premji Invest.
Premji Invest currently owns 6% in Future Retail, with the investment firm looking to increase its stake.
However, a deal with Mukesh Ambani’s retail business may see the company selling a stake in more than just Future Retail. If a deal is struck with Reliance Retail (part of Reliance Industries), Future Group will be selling stakes in Future Consumer and Future Lifestyle as well.
Future Consumer includes the company’s food, home and personal care. This includes its food brands such as Nilgiris, Tasty Treat, Karmiq, Desi Atta, Golden Harvest, Sunkist, homecare brands such as Clean Mate, and personal care brands such as Kara.
Future Lifestyle includes its discounted fashion store Brand Factory and retail mall Central.
As per reports, if Reliance Retail gets the deal, Kishore Biyani may lose control of the company he founded.
If the deal goes through, it will also give Mukesh Ambani a much stronger hold on the country’s retail business, and further boost the company’s e-commerce plans.
It might pit Reliance Industries against Amazon, which has a stake in Future Group after it picked up 49% stake in Future Coupons, the promoter entity of Future Retail. Through this deal, Amazon indirectly holds a 3.6% stake in Future Retail.
As part of the agreement, Amazon also gets a call option, where, three years from now, subject to the prevalent FDI norms at the time, promoters of Future Retail can sell a partial or controlling stake to Amazon.
Kishore Biyani, who has seen the group debt of the company increase to nearly Rs 12,800 crore has been looking to sell company assets to pare down debt.
Apart from a stake sale in its flagship businesses, Future Group has also hired an investment bank to scout for buyers for its logistics business Future Supply Chain Solutions and for a stake sale in its insurance company Future Generali, which is a joint venture with Italy’s Assicurazioni Generali.
This is the second time that Biyani has had to sell off businesses to pare down debt. Eight years ago, he sold his apparel store business Pantaloons to Aditya Birla group when the company saw its debt mounting.