Pantaloon plans to raise $200 mn from unit stake sales

Pantaloon plans to raise $200 mn from unit stake sales
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First Published: Fri, Mar 30 2007. 09 50 AM IST
Updated: Fri, Mar 30 2007. 09 50 AM IST
Subramaniam Sharma and Elliott Gotkine, Bloomberg
New Delhi/Barcelona: Pantaloon Retail (India) Ltd, the nation’s biggest publicly traded retailer, plans to raise as much as $200 million (Rs869 crore) by selling stakes in some of its units to pay for new stores.
“We are looking at divesting some of our subsidiaries,” managing director Kishore Biyani, 45, said in an interview in Barcelona earlier this week. “We are looking at dropping down some of our businesses into a subsidiary and raising money.”
Pantaloon plans to spend Rs26 billion in four years to add stores in India’s biggest cities and towns, competing with Reliance Industries Ltd and the local venture of Wal-Mart Stores Inc. The country’s economy is expected to expand at least 9% in 2007 for a third successive year.
“We are adding economic growth of $80 billion to $100 billion every year and that is creating a new consumption market of $40 billion every year,” said Biyani. “Now is the time for understanding your formats and learning about your consumers and making them spend money.”
Mumbai-based Pantaloon plans to sell stakes in its e- commerce, media and capital units, Biryani said. Spinning off some of its retail businesses into separate companies and then selling stakes in them will raise between $150 million and $200 million, he said.
Going Online
Sales at Pantaloon increased 68% to Rs21.1 billion in the eight months ended 28 February, the company says on its Web site. It offers online services called futurebazaar.com and Future Capital Holdings Ltd, which manages private equity and real estate funds.
The company plans to increase its stores to about 3,500 in 90 cities and towns by 2,010 from 160 stores in 38 cities and towns, Pantaloon spokesman Atul Takle said in an interview on 28 March.
Shares of Pantaloon have gained 1.2% since the start of the year, compared with a 5.8% decline in the benchmark Sensitive index of the Bombay Stock Exchange.
Pantaloon also competes with the Tata Group, the Bharti Group and the Aditya Birla Group in India. Sales through store chains in the world’s second most populous country are expected to reach as much as 35% of retail sales by 2015, up from about 3% now, according to Wal-Mart, the world’s biggest retailer.
Wal-Mart in November agreed to form a wholesaling and supply-chain venture with New Delhi-based Bharti Group. Indian billionaire Sunil Mittal’s Bharti Group plans to spend $2.5 billion on the retail network.
Reliance Industries opened its first store in November and plans to have 100 million square feet of retail space by 2011.
Pantaloon has sold stakes in its subsidiary Home Solutions Retail (India) Ltd, which operates stores selling consumer electronics, furnishings, furniture and other household items.
It sold a stake valued at $12 million to the India Growth Fund of Kotak Mahindra Bank Ltd this month and another valued at Rs1.2 billion to ICICI Ventures Ltd four months ago, Takle said in an interview yesterday. He declined to give the number of shares sold to each investor.
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First Published: Fri, Mar 30 2007. 09 50 AM IST
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