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PE-backed Future Supply Chain seeks $412 mn valuation via IPO

28 November, 2017

Future Supply Chain Solutions Ltd, the logistics arm of Kishore Biyani-led Future Group, is seeking a valuation of Rs 2,660 crore ($412.36 million) in its initial public offering (IPO) that begins next week.

Parent firm Future Enterprises has fixed a price band of Rs 660-664 apiece for an IPO size of Rs 649.69 crore ($100.72 million), it informed the stock exchanges on Tuesday.

VCCircle had first reported that Future Supply Chain, backed by private equity firm SSG Capital, had picked merchant bankers to list the logistics company.

The IPO, which opens on 6 December and closes two days later, comprises entirely of secondary market sale by promoter entity Future Enterprises and SSG Capital.

The IPO will see a sale of 9.78 million shares, resulting in a 24.42% stake dilution on a post-issue basis. The promoter’s stake will drop to 52.47% after the IPO from 57.35% now.

SSG will sell 78.27 million shares in addition to its partial exit last week, as part of a pre-IPO round. Its stake will drop to 14.63% after the IPO compared with 34.18% now.

VCCircle reported last week that SSG Capital had scored big returns from its bet on Future Supply. SSG sold a 5% stake as part of the pre-IPO round, marking the first such liquidity event in its India portfolio.

Future Group had filed a draft prospectus for the IPO on 23 August. It received the Securities and Exchange Board of India’s approval on 26 October.

Future Supply Chain will become the group’s sixth firm to list on the exchanges. Other listed firms are Future Retail, Future Consumer, Future Market Networks, Future Enterprises and Future Lifestyle Fashions.

In February 2015, the company’s board announced that it planned to sell shares either via an IPO or a PE stake sale. Soon after, in April 2015, Future Supply Chain issued convertible debentures to GTI Capital for $8.5 million, as per VCCEdge, the data research platform of VCCircle.

In April 2016, Singapore-based distressed assets fund management firm SSG Capital acquired a 40% stake in Future Supply. This deal valued the company at Rs 1,450 crore.

Edelweiss, CITIC CLSA and Nomura are the global coordinators and book running lead managers for the IPO. IDFC, IIFL and Yes Securities are the other merchant bankers involved.

Future Supply Chain
The company is a third-party logistics operator for sectors like retail, fashion and apparel, automotive and engineering, food and beverage, fast-moving consumer goods, e-commerce, healthcare, electronics and technology and home and furniture.

Originally established to provide supply chain and logistics solutions for Future Group, it has diversified its customer base over time. Revenues from clients outside the group accounted for 37.5%, 50.5% and 53.5% of total in FY2017, FY2016 and FY2015, respectively.

As of July 31, 2017, it ran contract logistics operations through 42 distribution centres across India, covering approximately 3.8 million square feet of warehousing space.

Its distribution centre at the Multi-modal International Hub Airport at Nagpur (MIHAN) is one of the largest automated facilities in India. Its high-speed cross-belt sorter system became operational in July 2017.

The company employs a hub-and-spoke distribution model comprising 14 hubs and 105 branches across India, covering 11,228 pin codes.

As of July 2017, it operated approximately 590 containerised vehicles, including 256 GPS-enabled vehicles. It also operates 9,529 pallets as part of its temperature-controlled logistics services.

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PE-backed Future Supply Chain seeks $412 mn valuation via IPO

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