US private equity firm Warburg Pincus has agreed to buy a controlling stake in financial services company Future Capital Holdings for Rs 550 crore.
Warburg will pay Rs 162 per share, an 18 percent premium on Future Capital’s Friday closing price of Rs 137, for a 53.7 percent stake. Reacting to this news, the stock galloped by 8.3 percent, heading to its highest single day percentage gain since April 30.Pantaloon Retail is also up 4 percent to Rs144.35 per share.
Warburg Pincus is buying 53.67 percent stake in Future Capital Holding (FCH) from the group in two tranches. According to the deal, Warburg Pincus is likely to buy minimum 40 percent stake in FCH from the Future Group and will infuse Rs 100 crore.
Post the stake sale, the consolidated debt of Future Group is likely to go below Rs 2000 crore, from Rs 7,000 crore currently, a CNBC-TV18 exclusive said on 21 May.
“This transaction is in line with our stated intention to exit from non‐core businesses of Pantaloon Retail and is aimed at deleveraging and further strengthening the balance sheet of the company. We are pleased to have Warburg Pincus as partners in Future Capital Holdings and are sure that they will have the support of all the existing shareholders and the management team in helping the company build and grow its financial services platform.” said Kishore Biyani, Founder and Group CEO, Future Group.
For the March quarter, the company reported a 21.4 percent jump in consolidated net profit to Rs 26.68 crore and a 31 percent jump in total income to Rs 226.20 crore from a year ago.
Warburg Pincus, founded in 1966, along with its affiliates has invested approximately $2.7 billion in Indian companies and currently has approximately $1.1 billion invested in India.
Future Capital, which is currently controlled by Pantaloon Retail, is a non-banking finance company that gives consumer and mortgage loans. It has a market capitalisation of Rs 929 crore.