For many people, Kishore Biyani is the Sam Walton of India, having created a vast retail business in the country. Now, he is tracing the footsteps of another American legend. He is all set to float another of his group companies, Future Ventures, an investment and business management firm modelled after ace investor Warren Buffett’s Berkshire Hathway in the public market.
Future Ventures is looking to raise Rs 750 crore ($170 million) through an IPO, almost a fifth of the sum it was eyeing in its previous attempt to go public three years ago, that will value the firm at Rs 1,576-1,657 crore (up to $375 million) post issue.
The company had consolidated net worth of Rs 738 crore as of December 31, 2010, with the value of investments pegged at Rs 112 crore. For the nine-month period ended in December, 2010, it had a total income of Rs 399 crore (primarily through retail sales of merchandise from its subsidiaries) with a net loss of Rs 14.67 crore.
Besides various privately held group firms of Biyani, Pantaloon Retail (India) is the single largest shareholder of Future Ventures with 18 per cent stake that will fall to 9.5-10 per cent post issue. Promoters’ combined holding will drop down to around 31-32 per cent post IPO while that of ad-for-equity media investor Bennett Coleman & Co Ltd (that also has investments in Pantaloon) will see its 12 per cent stake drop to around 6.5 per cent, according to VCCircle estimates.
Future Ventures seeks to create, build, acquire, invest in and operate businesses in ‘consumption-led’ sectors in India, defined as sectors whose growth and development will be primarily determined by the growing purchasing power of Indian consumers and their changing tastes, lifestyle and spending habits.
It tends to focus on opportunities in fashion, FMCG, food processing, home products, rural distribution and vocational education. Also, it looks to exercise operational control or influence in the business ventures in which it invests
At present, it has 14 business ventures with fashion/apparel being the dominant segment. In the fashion segment, its portfolio firms include women’s apparel firms AND Designs and Biba Apparels, fashion accessories firm Holii Accessories (a joint venture with Hidesign India Pvt Ltd), Indus-League Clothing (a designer, manufacturer and retailer of readymade garments under brands such as Indigo Nation, John Miller and Scullers) and men’s apparel and fashion firm Celio Future Fashion, besides Lee Cooper (India) Ltd and Turtle Ltd.
Others include home products firm Indus Tree Crafts Pvt Ltd (a social entrepreneurship that distributes handcrafted furniture and home accessories under the brand Mother Earth), processed food company Capital Foods Exports Pvt Ltd (brands include Ching’s Secret, Smith & Jones and Kaeng Thai), FMCG firms Future Consumer Enterprises (brands such as Tasty Treat, Clean Mate, Premium Harvest and Fresh and Pure), Future Consumer Products (brand Sach) and rural distribution firm Aadhaar Retailing Ltd, besides edutainment products firm Amar Chitra Katha Pvt Ltd and SSIPL Retail (a retailer of Nike products, as well as a manufacturer and distributor of footwear and other products).
It owns majority stake in six firms – Aadhar Retailing, Future Consumer Products, Future Consumer Enterprises, Lee Cooper (India), Indus Tree and Indus League. Future Ventures has indirect shareholding in three of its business ventures while one of its subsidiaries is a step-down subsidiary.
The firm will continue with its existing business strategy of owning a significant stake in portfolio firms to exert operational control or say in the management, and has stated that it “will also pursue appropriate longer-term value creation strategies, which may include unlocking value in our business ventures through public market or private sales, after taking into account factors such as the stage of development of the relevant business venture and general market conditions.”
But it may also expand the targeted investment areas beyond domestic consumption-led sectors. Future Ventures is also looking to invest in more ‘mature opportunities’ in companies which, it believes, have unrecognised growth potentials or are undervalued or in which it can identify hidden assets or recovery potential. “We believe that this approach will position us to perform well in a variety of market conditions and add complementary assets to our business,” the organisation said in its IPO prospectus.
