Future Group announced that it has executed definitive agreements to divest its stake in Future Capital Holdings [FCH] in favour of leading global private equity firm, Warburg Pincus. As part of the transaction, Pantaloon Retail India Limited and its wholly owned subsidiary Future Value Retail Limited will sell its stake in FCH at a price of Rs 162 per share to Cloverdell Investment Limited, an affiliate entity of Warburg Pincus.
Warburg Pincus also announced it has reached an agreement to infuse Rs. 100 crores of primary capital through a preferential allotment in FCH. The Board Directors of Future Capital Holdings has approved this preferential allotment of equity shares and / or convertible securities to Warburg Pincus.
This transaction will also result in Warburg Pincus making an open offer to the existing shareholders of FCH under the SEBI (Substantial Acquisition of Shares & Takeover) Regulations, 2011, the details of which will be announced shortly.
Mr. V Vaidyanathan, Vice Chairman and Managing Director, will continue to head the company and Mr. Vishal Mahadevia, Managing Director, Warburg Pincus will be inducted to the Board of Directors of FCH.
Formed in 2007, as a wholly‐owned subsidiary of Pantaloon Retail, FCH is a leading Non‐Banking Financial Corporation (NBFC) focusing largely on providing loans to SMEs. It also provides Gold Loans, Consumer Durable Loans, Two wheeler loans, Senior Secured Wholesale loans, Wealth Management and Broking services. As on 31st March 2012, the company had made advances of Rs 4670 crores and has a network of 197 branches in 41 cities.
Commenting on the transaction, 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. We are pleased to have Warburg Pincus as partners in Future Capital Holdings and are sure that they will have the support of all the existing shareholders and the management team in helping the company build and grow its financial services platform .”
Commenting on the development, Mr. V Vaidyanathan, Vice Chairman and Managing Director, FCH said, “We welcome Warburg Pincus on board as new shareholders. We also welcome the investment of Rs. 100 crores of incremental Tier 1 capital into the company. The company is on a firm footing and is well poised to grow in the MSME space, and we will continue to invest and grow in the chosen businesses. ”
Vishal Mahadevia, Managing Director, Warburg Pincus India Private Limited said, “Future Capital is led by a highly experienced and dedicated management team, and has developed a unique and differentiated financial services business. The Company is well placed to address the needs of the large underserved base of MSME and retail customers across India and we are excited to be part of this opportunity going forward. ”
Morgan Stanley acted as the lead financial advisor to Pantaloon Retail India Limited and Future
Value Retail Limited. Enam Securities acted as the co‐advisor to Future Group.