Warburg Pincus stake buy in Future Capital likely via Future Value Retail

Private equity major Warburg Pincus is likely to acquire a controlling stake in Kishor Biyani’s non-banking financial company, Future Capital Holdings by buying majority stake in Future Value Retail.

Pantaloon will transfer its entire stake in Future Capital to Future Value Retail, sources told CNBC-TV18’s Kritika Saxena. Post the deal, Warburg will indirectly hold more than 25 percent in Future Capital.

According to sources in the know,the US-based private equity company is likely to pay Rs 160-175 per share for FCH, valuing the deal at Rs 600 crore. The Future group was also in discussion with other PE players, including Bain Capital, for selling its stake in FCH.

[caption id=“attachment_316108” align=“alignleft” width=“380” caption=“Kishor Biyani”] [/caption]

Post the stake sale, the consolidated debt of Future Group is likely to go below Rs 2000 crore, from Rs 7,000 crore currently.

Warburg Pincus, however, said it cannot discuss deal-related investment activities as the firm is bound by internal operational policies. On the other hand, Future Capital said it was still in talks with potential investors for a sale, adding that it will not comment on speculation.

The Future Capital deal will be the second that the Biyanis have announced within a week - aimed at easing the debt burden of the group.

The sale of the Pantaloon format business of Pantaloon Retail India Ltd to Aditya Birla Nuvo Ltd was announced earlier this month. Pantaloon Retail had Rs 2,826 crore of debt on its books as of December 31, 2011. Future Capital had debt of Rs 2,500 crore as of March 31, 2011. Another chunk of debt is held in the unlisted arm Future Value Retail Ltd.

The company has been struggling to cope with its high debt, which has more than doubled over the last two years.