Pantaloon Retail, India’s largest retailer, has got the board approval to raise upto Rs 1,000 crore by selling shares to investors. The board of Pantaloon has also "mandated to the management to consider" the merger of its subsidiary Home Solutions Retail (India) Ltd. Home Solutions has raised two rounds of funding from ICICI Venture and Kotak SEAF India Fund. Pantaloon Retail owns chains like Big Bazaar, Pantaloon, Home Solutions, Food Bazaar, Central and others. The
securities may also be issued in several tranches in a qualified institutional placement (QIP) or on preferential allotment basis.
Private equity major TPG is leading the race to pick up a less than 15% stake in Pantaloon Retail, reports Mint. The retailer is looking at a price of Rs 400 per share, which is 33% more than yesterday's closing price Rs 299.55. TPG could invest Rs 950 crore at Rs 400 per share to pick up a 14.9% stake.
Picking up more than 15% stake would trigger an automatic open offer for another 20% stake as per guidelines of India’s capital markets regulator SEBI. Also portfolio investors, like private equity funds, are only allowed to hold upto 26% stake in an Indian retail company.
Others like Bain Capital and Apax Partners are also in the race to pick up the stake. Carlyle, Blackstone, KKR and Goldman Sachs are also in the race, reports Business Standard.
Pantaloon Retail in May raised $70 million from its promoters and Bennett Coleman & Co Ltd (media firm which invests through ad for equity deals) through equity shares and warrants. The promoter holding will increase to 51% through the equity issue and if warrants are converted into equity it would go up further to 53%. Before the issue, promoter holding stood at 46%.
Merging Home Solutions
The company has added in its filing that it's considering merger of its subsidiary Home Solution Retail with itself. Home Solutions raised Rs 120 crore ($26.6 million) in 2006 from ICICI Venture and Kotak SEAF India Fund. Then through a rights issue this year the company raised
another Rs 150 crore. ICICI Venture has a 15% stake, while Kotak SEAF has a 6% stake.
The merger with listed Pantaloon Retail will certainly give the investors more liquidity. Pantaloon is looking at merger to "have better synergy and efficiency in the retail business."
Home Solutions is a retailer of products like electronics, consumer durables, furniture and home improvement products, which are retailed under different brand names. These include eZone (high end consumer electronics specialty store), Collection I (luxury furniture & furnishings) and HomeTown (home improvement store).