Future Retail to raise Rs 2,000 crore from promoters

Future Retail said it will raise Rs2000 crore from promoters which will be used to lower rentals, one of the biggest cost of running retail operations.

"Promoters and management are highly motivated to contribute towards an integrated growth for Future Retail. To this extent, promoters are committing an equity infusion of Rs 2,000 crore at a price of Rs 505 per share," Future Retail said in a statement to the BSE. "The endeavor is to completely do away with lease rentals in next eighteen months." The promoter's commitment is at a 13% premium to its current price. On Monday, Future Retail's shares closed at Rs444.6 a piece on the BSE.

Equity infusion, coupled with inflow of upside share of Bharti and Heritage Retail, will help reducing lease rentals payable to another group company Future Enterprise. During quarter ended December, Future Retail's rent was Rs375 crore. It posted a 13% jump in sales at Rs5301 crore with net profit increase of 10% at Rs201 crore during the third quarter.

The Kishore Biyani promoted retail firm said the move will be hugely accretive to both margins and sales growth. In the past six years, Future Retail has acquired more than seven supermarket store chains to put together a total store count of 1444 in 409 cities, a national presence that can only be matched by Reliance Retail. It also controls nearly a third of the country’s organised food and grocery market through the Big Bazaar, EasyDay, Nilgiris supermarket chains and other outlets.

"Pledging of shares as percentage of promoter stake for Future Retail from 46.03% to 47.15% quarter-on-quarter is one of the key monitorable," said Abneesh Roy, senior vice-president, institutional equities at Edelweiss Securities.

A month ago, the family office of Future Group raised Rs 3,000 crore. AION Capital Partners has invested Rs 1,400 crore in a Biyani family holding company, while another Rs 980 crore has come from Italian insurer Generali Group buying a 23% stake in joint venture Future Generali. US brand Skechers will pay Rs 580 crore for the 51% stake that it doesn’t hold in another joint venture.

Source:-https://retail.economictimes.indiatimes.com/news/industry/future-retail-to-raise-rs-2000-crore-from-promoters/67844208