Future Retail seeks to encash around $110M from logistics arm via IPO, sale to PE

Kishore Biyani-controlled Future Retail Ltd is looking to monetise its investment in logistics arm Future Supply Chain Solutions Ltd by offering to sell shares in an initial public offer (IPO) or through a stake sale to either a private equity firm or another strategic investor.

The company's board has approved divestment of part of its investments in Future Supply Chain and authorised a committee to consider various options to encash up to Rs 700 crore ($112 million), it said on Thursday.

Future Supply Chain is into logistics, transportation, distribution and warehousing space. Future Retail owns 70.17 per cent stake in the logistics firm.

Earlier in 2009, Hong Kong-based supply chain giant Li & Fung Group had acquired 26 per cent equity stake in the company for $30 million, valuing it at around $120 million. This deal was routed through its private investment arm Fung Capital.

Future Supply Chain has warehousing space of 2.7 million square feet and during the period ended March 31, 2014, registered income from operations of Rs 521.34 crore and earned net profit of Rs 9.33 crore.

It also owns FSC Brand Distribution Services Limited, which is into distribution services. This unit had revenue of Rs 5.69 crore and net loss of Rs 4.29 crore in FY14.

In October last year, Future Supply Chain agreed to acquire Delhi-based food logistics firm Brattle Foods Pvt Ltd for an undisclosed amount, as part of its plans to address the frozen, chilled and cold warehousing requirements coupled with the reefer transportation requirements across the country for its customers in the food domain.

Indian logistics and cold chain industry has been attracting investor interest. Recently, Gati Kausar India Ltd, the cold chain arm of Gati Ltd, raised Rs 150 crore ($24.45 million) from funds managed by Mandala Capital.

Gateway Distriparks' unit Snowman Logistics Ltd also successfully completed a heavily oversubscribed IPO.

Shares of Future Retail last changed hands at Rs 116.2 each, down 4.16 per cent on the BSE in a strong Mumbai market on Thursday.

(Edited by Joby Puthuparampil Johnson)

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