Shares of Future Capital Holdings, which provides consumer and mortgage loans, on Monday soared over 9% intra-day after US-based private equity firm Warburg Pincus agreed to buy a controlling stake in the Kishore Biyani-led Future Group firm for $98.8 million (Rs 306.4 crore). The scrip ended up 4.8% at Rs 144 on the Bombay Stock Exchange (BSE). Stocks of Pantaloon Retail, a Future affiliate, also jumped 6.9% to close at Rs 149 on the BSE.
Warburg would initially buy 53.7% holding from group firm Pantaloon Retail and then make a public offer to remaining shareholders. Warburg would also inject Rs 100 crore of primary capital through a preferential allotment by in the company.
The deal comes at Rs 162 per share and 18% premium to Future Capital’s closing price on Friday.
“The deal will help trim debt significantly,” said a company source.
“The FCH stock will see correction as Warburg has made an overconfident buy with little scope of attracting other investors,” said an analyst with a brokerage firm. So far Warburg has invested about Rs 17,000 crore in India.