Future Group founder Kishore Biyani is exploring a significant stake dilution in Future Retail and a merger of insurance joint venture Future Generali with bigger, well-capitalised players, The Economic Times said.
If his deals don’t fructify or existing investors fail to support, Biyani could lose control of his flagship retail firm that runs Big Bazaar supermarkets.
Biyani is in talks with investors including PremjiInvest to sell a large chunk of the promoter stake in Future Retail to tide over his liquidity crisis, the publication said.
An alternative, a rights issue at Future Retail, seems far-fetched since regulations restrict Amazon, which is a current shareholder, to invest further, two people privy to the talks said.
The group is also looking at merging its insurance joint venture and is said to have sent feelers to SBI Life.
Future Corporate Resources Private Ltd’s recent default on its debt payments led to IDBI invoking Future Retail’s pledged shares. This resulted in Biyani’s shareholding to fall by 8%.
In addition to the recent default, lenders have threatened to invoke additional shares of Biyani’s holding company after the group’s capitalisation ratio increased to 1.3 times.