Kishore Biyani, who controls the Future Group that owns the Big Bazaar chain, is looking at some more stake sales and reshuffling of chunks of his business as he gears to build the second phase of his retail empire.
While flagship firm Pantaloon Retail Industries Ltd (PRIL) — which owns Big Bazaar — recently sealed a few deals to trim debt, it will continue the exercise with more stake sales (in part or in full) before going ahead with expansion plans in its core bsusiness.
Deals in the pipeline involve stake sales in firms such as Staples Future Office Products, Future Supply Chain, electronics retailer e-Zone, interiors and furnishing store chain Home Town, besides an insurance joint venture, Future Generali.
“We do have a lot of non-core retail business. Some of them are prime investments, which are good for exit,” said Kishore’s younger brother Rakesh Biyani, who is joint managing director, Future Group. “The company is well poised to make a comeback, as it has more or less been able to control its debt. It’s going to focus on apparel, food and home,” said Abneesh Roy, associate director, Institutional Equities, Research, Edelweiss.
With a consolidated debt of Rs. 7,800 crore weighing on its profitability, Pantaloon Retail has been spending more than Rs. 100 crore in interest over each of the past three quarters.
PRIL’s recent deals with Aditya Birla Nuvo, Bennett Coleman and Cloverdell Investment together help the group cut debt to Rs. 3,300 crore over coming quarters. “By June 2013, our debt will be much lower than what it is now. We will continue to expand at 1.5 million square feet per annum,” said Rakesh Biyani.
The Staples sale stake is expected to fetch R150 crore. PRIL holds 39.5% stake in Staples Future Office Products, a joint venture between the company and Staples Asia Investment (a unit of Staples, US). The deal is likely to materialise by July end.
The other big business where Biyani is looking to sell is the insurance business.
In Future Supply Chain (FSC), a supply management firm, the group may hive off part of its 70% stake. The rest is held by Li & Fung. FSC has a debt of Rs. 125 crore.