Pantaloon Retail To Sell Stake In Future Capital Holdings

Pantaloon Retail India Limited is looking to sell its 54% stake in the financial services arm Future Capital Holdings Limited.

The funds raised from stake sale will be used to repay part of its debt. Pantaloon has debt of around Rs.3400 Cr, while Future Group's debt stands at Rs.4800 Cr across retail businesses, including its financial services business.

Morgan Stanley has been appointed as an advisor to the deal.

Transaction Reference: Economic Times

At the current Future Capital's stock price of around Rs.146.50 per share, Pantaloon's 54% stake could fetch around Rs.510 Cr.

Future Capital Holdings, part of the Future Group, was incorporated in 2005 and was promoted by Kishor Biyani and Sameer Sain, formerly of Goldman Sachs. The two parted ways later, with Sain heading a private equity company Everstone Capital while the financial services business was consolidated under Future Capital.

FCH is a NBFC , comprising insurance, retail financial services and wholesale credit under it.

The company is expected to grow the loan book to Rs.5,000 Cr by March 31, 2012. Kishor Biyani holds 7.37% stake in Future Capital.

Biyani earlier planned to restructure the financial services business of the Future Group but the recent changes in FCH have been led by Vaidyanathan, former CEO of ICICI Pru Life Insurance, who joined the Future Group a year ago, after Sameer Sain, a former MD of Goldman Sachs Group, Inc quit.

The current market cap of Future Capital Holdings is Rs.943 Cr and it posted revenue of Rs.55.29 Cr with net profit of Rs.17.32 Cr for FY2010.

Last year, FCH exited from its two joint venture companies with Centrum Capital - FCH CentrumDirect Limited and FCH Centrum Wealth Managers Limited.

In 2010, Future Capital acquired Mauritius-based Anchor Investment & Trading Pvt Ltd for expansion in the international market and in 2009 it acquired a NBFC - Black Diamond Finance.

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