Future Consumer Looks To Raise INR 300 Cr Via Rights Issue

Kishore Biyani-led Future Group’s fast-moving consumer goods (FMCG) business Future Consumer is looking to raise INR 300 Cr through a rights issue, as retailers and ecommerce players look to build up the capacity for delivery and distribution of essentials.

As per the Bombay Stock Exchange (BSE) filing of May 16, the company’s board of directors has appointed a committee of directors, who will finalise the terms and conditions of the rights issue. This will include rights entitlement ratio, issue price, record date, payment option, the timing of the rights issue and other related matters’ at a later date.

“…this is to inform you that the Board of Directors of the Company (“Board”), have at their meeting held today, i.e. May 16, 2020, inter-alia considered and approved, raising of funds, up to Rs. 300 Crore, by way of issuing equity shares having face value of Rs. 6/- each of the Company on a rights basis (“Rights Issue”) to the eligible equity shareholders of the Company…,” the BSE filing read.

Amazon-Future Group Deal

Last week, media reports highlighted that Future Group is looking to sell a significant chunk of its Future Retail Business to ecommerce giant Amazon. For this, the company is reportedly looking to demerge its food business as Indian foreign direct investment (FDI) allows 100% overseas capital in retail entities that only deal in locally sourced and packaged food. This will allow the company to raise more capital.

As per the reports, the deal between Amazon-Future Retail will be similar to the one between Amazon and Aditya Birla’s More retail stores. Amazon had picked up a 49% stake in More.

The potential stake sale would not be the first deal between Amazon and Future Retail. Last year, Amazon acquired 49% stake in Future Retail’s promoter entity Future Coupons. Future Coupons owned 7.3% shares in the Future Retail and through this transaction, Amazon has also acquired around a 3.58% stake in the publicly-listed company.

The company has reportedly been taking such steps to reduce its debt of over INR 10K Cr. Meanwhile, Future Group is also said to be in talks with Premji Invest to raise capital.

Recently, Future Group had also announced plans to exit its insurance joint venture. The company is selling its non-core assets to repay loans to banks and redeem shares pledged with other lenders.