Future Capital to exit from 2 joint ventures with Centrum

Kishore Biyani’s Future Capital Holdings (FCH) on Friday decided to exit from its two equal joint ventures with Centrum Capital, paving the way for plans to independently grow its broking and wealth management businesses.

By the new arrangement, mutually decided, Centrum Capital will buy FCH’s 50 per cent stake in FCH Centrum Direct for Rs 100 crore. In 2008, FCH had invested Rs 75 crore for a 50 per cent stake in this JV, which is primarily in the business of foreign exchange. As part of the same arrangement, FCH will buy out Centrum Capital’s 50 per cent stake in FCH Centrum Wealth Managers for Rs 1 crore. In 2008, FCH had invested Rs 25 crore in this joint venture, which is in the business of retail wealth management.

In two separately convened meetings on Friday, the boards of FCH and Centrum Capital independently approved these transactions, which are subject to regulatory approvals.

“We are excited about building an excellent broking and wealth management franchise, brought to us through the acquisition of FCH Centrum Wealth Managers. Our exit from the second joint venture of FCH Centrum Direct is in line with our already stated strategy in this matter,” said V Vaidyanathan, vice chairman and managing director of FCH.

Future Capital aims to become a Rs 8,500-crore financial services giant in the next couple of years.

Separately, Centrum Group’s talks with Citibank to buy a part of CitiFinancial India’s portfolio for Rs 550-700 crore is “at an advanced stage of closure”, according to officials familiar with the matter.

For organic expansion of its retail financial services business, headed by Rajnish Bahl, Centrum Group plans to invest Rs 500 crore. In recent months, it has opened 16 branches in major cities for its wealth management and retail stock broking businesses. It has roped in Sandeep Nayak from HSBC InvestDirect as the chief executive officer of its retail broking business.

Centrum has hired about 20 senior-level executives in the past two-three months for its retail financial services business. For its foray abroad, the Mumbai-based group’s retail financial services arm has tied up with a local bank in Hong Kong and plans to have presence in Singapore and West Asia. Centrum's plan is to increase its distribution presence from 45 cities at present to 100 in three years.