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CDC backs Future Consumer with debt funding

16 February, 2018

Kishore Biyani-led Future Consumer Ltd is raising Rs 200 crore ($31 million) through non-convertible debentures from UK-based development finance institution CDC Group Plc. to finance its capex and long-term working capital requirements.

The funding, which has a tenure of seven years, will have lower cash-coupon rates for the first two years, the company said in a disclosure. The repayments will start after three years.

CDC typically takes a flexible approach to investments, and provides capital for equity, debt, mezzanine funding and guarantees, to meet the needs of businesses. Globally, the firm has £4.8 billion ($6.8 billion) in net assets, and has been investing in India since 1987.

CDC will also help Future Consumer explore, evaluate and implement projects to enhance their impact by providing support across the company’s network of smallholder farmers, suppliers and customers.

“CDC joins other marquee institutional investors, such as International Finance Corporation and Proterra Partners, who have recently partnered in the growth journey of our company. As an integrated farm-to-plate company, we at Future Consumer responsibly impact the life of farmers, producer groups, consumers and every stakeholder in our ecosystem. We, along with CDC, plan to work towards the furtherance of this agenda,” said Biyani, the vice-chairman of Future Consumer.

The company has posted revenues of Rs 645 crore in the third quarter of 2017-18, and registered 52% year-on-year growth. Its net profit was at Rs 6.9 crore, which is a fivefold increase from the year-ago period.

“By providing long-term finance, we are delighted to support FCL’s ambitious growth, and develop a long-term partnership with them to develop a range of programmes that will improve sustainability,” said Srini Nagarajan, managing director and head of South Asia, CDC.

“We will join forces to help improve the livelihoods of the more than 19,000 smallholder farmers across FCL’s network,” he added.

In 2016, International Finance Corporation had infused $20 million (then Rs 134 crore) through equity-linked instruments in the company. IFC, the private-sector investment arm of the World Bank, invested via compulsorily convertible debentures and equity shares.

Future Consumer is part of retail entrepreneur Kishore Biyani-led Future Group. Its products include processed and frozen food, dairy and bakery items, juices, snacks and biscuits, besides rice, wheat, spices, pulses and sugar.

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CDC backs Future Consumer with debt funding

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