Future Group shares rally as board nod for stake sale in FCH to Warburg

Board approved a 40% stake sale in FCH to U.S. private equity firm Warburg Pincus LLC at a price of Rs 162 per share.

Shares of Kishore Biyani promoted Future Group companies – Future Capital Holdings (FCH) and Pantaloon Retail have rallied more than 6% each in otherwise weak market, after the board of both these companies have approved a 40% stake sale in FCH to U.S. private equity firm Warburg Pincus LLC at a price of Rs 162 per share.

“Pantaloon Retail (India) Limited and its wholly owned subsidiary, Future Value Retail Limited, have inter alia entered into Share Purchase Agreement (SPA) with Cloverdell Investment Ltd, one of the affiliated entity of Warburg Pincus, to sale its holding in FCH in two tranches representing a maximum of 53.67% but subject to a minimum of 40% of the equity share capital of the company,” FCH said in a filing.

This SPA and further resolution passed today by FCH board to make preferential allotment of equity shares and / or convertible securities of around Rs 100 crore to Purchaser subject to the approval of members will require the Purchaser to make an open offer under the SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011, it added.

Pantaloon Retail, which holds 53.67% in FCH, is likely to use the proceeds to pay back debt. FCH stock has surged 9.5% at Rs 150, while Pantaloon Retail rallied 7.2% at Rs 149 on the Bombay Stock Exchange, against around 1% fall in the benchmark index Sensex at 1305 hours.