In a move that suggests how online retail and offline retail are merging to combat dwindling margins, Flipkart has begun exploratory discussions with Kishore Biyani to pick up an 8%-10% stake in Future Lifestyle Fashions Ltd (FLF). As per people aware of the development, top management from both sides met last week in Mumbai to discuss the matter and follow-up meetings are due post Diwali.
Future Lifestyle, the listed fashion arm of the Future Group, is one of the largest branded apparel retailers in India with total retail space of 5.4 million sq ft across 400 stores in 90 cities. It owns and markets 41 domestic and global fashion brands including Lee Cooper, Scullers, Indigo Nation, John Miller and Jealous 21. Additionally, it has large department store formats like Central and Brand Factory as well as specialist niche formats such as Planet Sports.
While the promoters own 60.6% of Future Lifestyle, of which around 49% is pledged as debt collateral. The remaining 39.4% is with the public and other institutional shareholders, which includes an 11.43% stake held by Wipro chairman Azim Premji’s investment arm Premji-Invest.
Taking into account the current market capitalisation of $1 Bn (INR 6,536.81 Cr) of Future Lifestyle, a 10% stake would translate into an investment of $100 Mn(INR 650 Cr). But Kishore Biyani is expected to ask for a significant premium to the current market price.
As per sources close to the development, the discussions are preliminary in nature and there is no guarantee a transaction will take place. However if it does, Kishore Biyani would likely use the proceeds to fund expansion plans.
An email sent to Flipkart spokesperson remained unanswered at the time of publication.