Mumbai: The investment arm of the Future Group, Future Ventures India Ltd, filed for regulatory approval for a Rs3,736 crore initial public offering (IPO), of which shares worth Rs266.07 crore will be open to the public.
The issue from the Future Group, which is the parent of India’s largest listed retailer Pantaloon Retail (India) Ltd, is unusual because the company will take stakes in consumption-led businesses. In addition, while the issue will go through the book-building process, the pricing may well be close to the Rs10 face value of the share, according to a person familiar with the development who did not want to be identified.
A company press release said that Future Ventures will dilute 66.52% stake, or 3.74 billion shares, of which 50 million shares will be reserved for Future Group employees and 250 million for Pantaloon shareholders. This values the company at around Rs5,660.61 crore.
Future Ventures was acquired and its name changed from Subhikshith Finance and Investments Ltd in July 2007, after which Pantaloon invested Rs325 crore in it. It now has a 28.4% stake in discount retail chain, Sankalp Retail Value Stores Pvt. Ltd, which runs Dollarstores International, and a 6.5% share in women’s wear retailer Biba International Ltd and one more retailer. The company release says it “seeks to create, build, acquire, invest in and operate business ventures in India’s rapidly growing consumption-led sectors.”
If the share price is actually close to the face value of the share, then it will be the first such issue since the Saamya Biotech (India) Ltd issue in September 2007.
“At par issues are almost extinct now,” Bandi Ram Prasad, senior consultant at Dun and Bradstreet Information Services India Pvt. Ltd, a business information provider.
“If this is such an issue it could restart a trend, which is very welcome,” said Deven Choksey,managing director of KR Choksey Securities, a Mumbai-based brokerage. Both Ram Prasad and Choksey said that such an issue would be welcome in a primary market where the initial IPO boom ended abruptly with the Emaar MGF Land Ltd and Wockhardt Hospitals Ltd issues being scrapped due to a lack of response and several promoters slashing price bands.
“Issues had been getting excessive price bands for a long time,” Ram Prasad added. “This could start a trend to get investors back in to the markets.”
The Future Ventures issue comes months after the Future Group’s financial arm, Future Capital Holdings Ltd, had a successful listing, raising Rs500 crore. The issue was subscribed 133 times.
On Friday, Future Capital’s share closed at Rs798.25— down 1.85% from its’ previous close on the National Stock Exchange (NSE).
Pantaloon’s share closed at Rs522.15,2— down 2.27% from its previous close on NSE.