Future Retail gains on stake sale plan in arm to SSG Capital

The stock rallied 5% to Rs 136 on the BSE in early morning trade.

Future Retail (FRL) has rallied 5% to Rs 136 on the BSE in early morning trade in an otherwise subdued market after the company said the asset management firm SSG Capital Management will acquire 40% stake in Future Supply Chain Solutions (FSC) from existing shareholders, including Future Retail, for Rs 580 crore.

Future Supply Chain Solutions is a logistics company in which Future Retail holds 70.17% stake.

“SSG Capital Management Group is investing up to Rs 580 crore to acquire 40% stake in FSC from the existing shareholders of the company at a valuation of up to Rs 1,450 crore. This will include 14% stake to be acquired from FRL and the management team collectively, and 26% from another minority shareholder SKC 1 Limited (SKC),” Future Retail said in a statement.

SKC is part of Fung Capital, the private equity investment arm of the families of Dr. Victor Fung and Dr. William Fung, the controlling shareholders of the Fung Group with businesses in trading, logistics and retailing.

Commenting on the deal, Future Retail MD Kishore Biyani said, it will result in estimated proceeds of up to Rs 185 crore for FRL’s stake. Given that the supply chain arm is of critical importance for furtherance of Future Retail’s overall business objectives, FRL will continue to a hold majority stake of 57.4% in FSC.

At 09:36 AM, the stock was up 3% at Rs 133 on the BSE as compared to 0.57% decline in S&P BSE Sensex. A combined 489,207 shares changed hands on the counter on the BSE and NSE so far.