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Rs 580-crore deal to buy 40% in Future Retail’s supply chain unit

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by April 8, 2016 General

With pact, SSG Capital Management Group to become second-largest shareholder

ingapore-based private equity investor SSG Capital Management Group has agreed to buy 40 per cent stake in Future Supply Solutions for Rs 580 crore from Future Retail and SKC 1 Limited, part of Fung Capital owned by Fung Group, valuing the company at Rs 1,450 crore.

After the transaction, Future Retail Limited (FRL) will continue to hold a 57 per cent majority stake in its supply chain unit, while SSG Capital Management will become the second-largest shareholder with 40 per cent stake.

SKC 1 Limited (SKC) will exit their entire 26 per cent stake in the company in favour of SSG Capital Management. The former is a 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.

Future Supply Solutions (FSC), incorporated in April 2007, is India’s first fully integrated and information technology-enabled end-to-end supply chain and logistics company with capabilities in handling modern warehousing, express logistics, cold chain and e-commerce logistics, said a company statement.

“This transaction, including our partnership with SSG, is a step towards our stated intent of optimal monetisation of some of the investments held by FRL. FRL has followed a multi-pronged approach for strengthening its balance sheet and this partial monetisation of its stake in FSC is a step in this direction. It will result in estimated proceeds of up to Rs 185 crore for FRL’s stake,” said Kishore Biyani, MD, Future Retail. 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, he added. FRL currently holds 70.17% equity stake in FSC, with SKC holding 26% and the remaining held mainly by the management team.

FSC registered a net profit of Rs 25 crore on income Rs 408 crore in FY15. Shyam Maheshwari, partner at SSG Capital, said “This transaction will enable us to participate in one of the leading and fast growing logistics and supply chain companies in India.”

Bantry Capital PTE Limited, Singapore, acted as a sole financial advisor. Future Retail shares gained 5 per cent in intra day trade to touch a high of Rs 136 before closing up about 1 per cent at Rs 130 in a weak Mumbai market, valuing the company at Rs 5,050 crore.

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