Future Consumer Enterprise Ltd (FCEL), the food and consumer goods arm of Kishore Biyani-led Future Group, has decided to raise $45 million (about Rs 297 crore) from Black River Asset Management, the private equity arm of US food and agriculture giant Cargill.
FCEL said in a stock market filing it will raise the money through preferential allotment of compulsory convertible debentures (CCDs) to Black River Food 2 Pte Ltd, a wholly owned unit of Black River Food 2 Fund LP.
The CCDs, with a face value of Rs 1 lakh each, are convertible into shares of the company within 18 months from the date of issue at a conversion price of Rs 22.73 a share.
FCEL also said that it has decided to raise Rs 67 crore (nearly $10 million) through a preferential allotment of warrants to promoters.
The company said it will use the funds for its various expansion plans and strengthen its balance sheet by improving the maturity profile of existing debt.
FCEL said it will also tie up with Black River’s Food Fund 2 “to explore possible upstream capabilities in the food and allied sectors”.
Black River had raised $523.5 million under Black River Food Fund 2, as per a filing with the US Securties and Exchange Commission in June.
Black River invests predominantly in food businesses across emerging economies. Until this deal, it had made two investments in India — in Hyderabad-based Dodla Dairies and Delhi-based Bakers Circle India Pvt Ltd. It typically makes private equity investments in the range of $25-50 million.
The investment in FCEL came months after Rakesh Sony, who was the former director of Motilal Oswal Private Equity Advisors Pvt Ltd, joined Black River. The PE fund had said that the move would strengthen its food investment franchise in India
FCEL said it has also decided to enter into a deal to make Future Retail Ltd the master franchisee for its convenience stores network that includes KB's Fairprice, Big Apple and Conveniently Yours, and Aadhaar, a rural wholesale distribution unit.
As per the agreement, the company’s operation will be limited to sourcing, manufacturing, branding and distribution of food and FMCG products.
FCEL, formerly known as Future Ventures, operates a neighbourhood retail chain in 102 cities and 60 rural locations.
In September, Belgium's family-owned consumer-sector focused investment company Verlinvest, a Limited Partner for private equity firm Everstone Capital, had picked up a 2.9 per cent stake in the FMCG major.
Recently, the company completed the buyout of convenience stores chain Nilgiri's, run by The Nilgiri Dairy Farm Pvt Ltd.
In May, it had bought the consumer products division of the diversified Aditya Birla Group firm Grasim Industries Ltd.
Around the same time, FCEL also announced that it was exiting the non-core beauty and wellness chain business, which was housed under its wholly owned subsidiary Star & Sitara Wellness Ltd.