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Warburg Pincus close to buying majority stake in Future Capital

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After selling his apparel business, Pantaloon Retail India, to the Aditya Birla Group, is set to sign another deal to sell a controlling stake in his non-banking financial company, (FCH).

According to sources in the know, the Future group, owned by Biyani, will sell its 56 per cent stake in FCH to Warburg Pincus. The US-based private equity (PE) company is likely to pay Rs 180 per share of FCH, valuing the deal at Rs 650-700 crore. The group was also in discussion with other PE players, including Bain Capital, for selling its stake in FCH.

FCH shares on Monday closed 0.33 per cent down at Rs 135.2 on the Bombay Stock Exchange (BSE). At the end of March, Pantaloon Retail and Kishore Biyani had 53.67 and 2.62 per cent stake in FCH, respectively. According to a statement filed with the BSE, Pantaloon Retail has transferred its promoter shareholding to Future Value Retail, a 100 per cent subsidiary of the Future Group.

Mails sent to V Vaidyanathan, vice-chairman and managing director of FCH, and Niten Malhan, managing director of India, did not elicit any response.

After disposing off FCH, the consolidated debt of the Future Group will go below Rs 2,000 crore, from Rs 7,000 crore at present. FCH has a debt of Rs 3,800 crore on its books. According to sources, Vaidyanathan will continue as the head of FCH after the deal.

In 2009, the PE business was spun off from FCH and renamed as Everstone Capital. FCH retained other businesses such as insurance, retail financial services and wholesale credit. Sameer Sain, who founded FCH with Biyani, runs Everstone Capital. In India, Warburg Pincus has so far invested about $3 billion. The PE major, which has invested about $40 billion globally, invested in major companies such as Bharti Airtel, Kotak Mahindra Bank and Gujarat Ambuja Cements.

Aditya Birla Nuvo, a part of the $35-billion Aditya Birla group, last week announced the acquisition of a majority stake in Future Group’s apparel and fashion businesses chain, Pantaloon Retail, for Rs 800 crore.

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