Bennett Coleman & Co doubling stake in Future Retail to 11.3% for $34M

Brand Capital, the private equity arm of ad-for-equity media investor Bennett Coleman and Co Ltd (BCCL), is hiking its stake in Mumbai-based Future Retail to 11.3 per cent through a fresh preferential allotment, as per a stock market disclosure.

Future Retail is issuing 15.38 million equity shares at Rs 130 each to Brand Equity Treaties Ltd, an entity under Brand Capital, aggregating Rs 200 crore.

Previously the ad-for-equity investor had picked shares worth around Rs 270 crore in the retail firm across two transactions in 2005 and 2012. With the latest allotment, its exposure to Future Retail will rise to Rs 470 crore, making it one of the biggest bets for BCCL among its portfolio companies, surpassing its Rs 300 crore investment in the past in Videocon.

It currently owns 5.83 per cent in Future Retail which would almost double with the fresh issue.

Future Retail (formerly known as Pantaloon Retail) serves customers in 95 cities across the country through around 10 million square feet of retail space. It operates through multiple retail formats in both the hypermarket, supermarket and home segments of the Indian consumer market with brands like Big Bazaar.

Future Retail is simultaneously issuing warrants at Rs 130 each, aggregating Rs 200 crore to Future Corporate Resources, a promoter group entity with an option to the warrant holder to acquire same number of shares within 18 months.

This would allow the promoters to maintain their existing holding. The promoters held 48.36 per cent stake as of March 31, 2014.

The company, which also counts shareholders like Arisaig besides Mount Kellett and ICICI Venture, is also looking to raise as much as Rs 1,600 crore through a rights issue. It said it plans to use at least 75 per cent of its proposed funding through the preferential allotment and the proposed rights issue to reduce the debt besides future growth plan.

Future Retail scrip crashed 7.22 per cent to close at Rs 135 a share on the BSE in a weak Mumbai market on Wednesday.

(Edited by Joby Puthuparampil Johnson)

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