Future group appoints Ambit to seek buyers for logistics arm

MUMBAI: Future Group has launched a formal process, giving the mandate to investment bank Ambit, to seek buyers for the group's stake in its logistics business-- Future Supply Chain Solutions Ltd (FSC)--as founder Kishore Biyani looks to tackle his debt problems, said two aware of the development.

FSC is a third-party supply chain and logistics service provider offering warehousing, distribution and other logistics solutions to a wide range of customers in industries such as retail, fashion and apparel, automotive and engineering, food and beverage, fast-moving consumer goods (FMCG), e-commerce, healthcare, electronics and technology.

"They have mandated Ambit and a formal process has been launched to find buyers for the group's stake in FSC. It is a non-core business for the group and thus they have identified it as one of the businesses to exit in order to raise capital and manage group and promoter debt," said one of the people, requesting anonymity as the talks are private.

Future Group has reached out to some strategic investors as well as financial investors but the sale process is at a very early stage and there are no firm proposals from interested buyers at the moment, he added.

Biyani and his family own 47.89% of Future Supply Chain.

Ambit declined to comment. An email sent to Future Group did not elicit a response.

The plan to exit the supply chain business is part of the larger effort at Future Group to resolve its debt related troubles.

The group is also seeking buyers for its stake in an insurance joint venture, while several investors have shown interest in the group's flagship company Future Retail that houses the BigBazaar chain of stores.

Biyani’s debt-related woes surfaced in March when shares of his listed firms crashed, triggering a rating downgrade of the promoter holding company and invocation of pledged shares by lenders.

On 4 May, rating agency Icra downgraded Future Corporate Resources, a promoter group entity, to D, after it defaulted on coupon payments. “The company has informed that it has sought a moratorium on payments from investors; however, the same has not been approved yet," Icra said.

"Despite monetisation of investments across various group entities, total group debt has increased as on 31 December 2019, as against 31 March 2019...total debt at the group’s listed firms rose to ₹12,778 crore as on 30 September 2019 from ₹10,951 crore as on 31 March 2019," Icra added.