International Finance Corporation and Belgian private investment firm Verlinvest SA will provide a total of Rs 280 crore (about $40.15 million) to Future Group-owned Future Consumer Ltd.
IFC will provide up to Rs 210 crore while Verlinvest will offer Rs 70 crore by subscribing to compulsorily convertible debentures, the World Bank’s private-sector investment arm said in a disclosure.
Future Consumer plans to use the capital to develop and expand its food and home and personal care manufacturing operations across the country, according to IFC’s disclosure. It will also use the money to expand its rural distribution network, meet its working capital requirements and debt repayments.
The company had first disclosed the planned investment by IFC and Verlinvest last month.
The Kishore Biyani-controlled Future Group and its entities will also contribute around Rs 70 crore through the issue of warrants. Both the warrants and the CCDs will be convertible into equity shares of Future Consumer 18 months from the date of allotment at a price of Rs 45.02 per share, according to a stock-exchange filing by Future Consumer. Shares of the company were trading 0.25% down at Rs 40.05 apiece on Wednesday afternoon.
Future Consumer operates as a sourcing-to-supermarket food and fast-moving consumer goods firm, operating brands such as Kosh Premium Oat Grains, Mother Earth and Mera Swad.
In 2018, the company raised Rs 200 crore (around $31 million then) through non-convertible debentures from the UK-based development finance institution CDC Group Plc. to finance its capital expenditure and long-term working capital requirements. It reported net sales of Rs 2,429.30 crore for the financial year ended March 2018.
This is the latest investment in India by IFC, which has an active direct private equity-style investment practice in the country. Earlier this week, it announced plans to invest up to $60 million in Mumbai-listed Deepak Fertilisers and Petrochemicals Corporation Ltd.
A couple of weeks ago, it offered to provide $50 million in debt funding to affordable housing loan provider Aavas Financiers Ltd to help it expand its housing finance programme in the semi-urban and rural parts of Rajasthan.
IFC also has an active limited partner portfolio in India where it backs private equity and VC funds focused on India. Earlier this week, the Washington D.C.-headquartered institution said it planned to invest $12 million in Quona Capital Management Ltd’s new venture capital fund that focuses on the financial services sector in emerging economies including India.
Meanwhile, Verlinvest has also made a series of investments in consumer-sector companies recently. Earlier this month, it led a Rs 182 crore Series C funding round in Drums Food International Pvt. Ltd, which sells yogurt under the brand Epigamia.
Last year, Verlinvest increased its stake in Sula Vineyards Pvt. Ltd in a deal that also involved an American family office coming as a new investor in India's largest wine maker. The overall deal was worth around Rs 364 crore, VCCircle reported at the time.