“There are a couple of other investors, too, that are in the fray. The deal is in advanced stages of discussion and the group is trying to close the transaction within this month," said one of the people on condition of anonymity. If Future group chooses to sell to a strategic investor, Biyani may have to give up control of the company he founded, the second person said.
Biyani’s debt-related woes surfaced in March when shares of his listed firms plunged, triggering a rating downgrade of the promoter holding firm and invocation of pledged shares by lenders. The stake sale will help the group pare its large debt.
“If they (the promoters) are able to bring in a financial investor that helps solve their problems, then the promoters might still continue in the business. But if they strike a deal with a suitor like Reliance, then the promoters will have to give up control," he said.
While Samara is eyeing a stake in Future Retail, a possible deal with Reliance could also involve the group’s apparel retail business Future Lifestyle Fashion Ltd, the person added.
An email sent to Future Group remained unanswered. Samara Capital declined to comment.
“As a policy, we do not comment on media speculation and rumours. Our company evaluates various opportunities on an ongoing basis," a spokesperson for Reliance Industries said.
Samara, in partnership with US e-commerce giant Amazon.com Inc., owns supermarket chain More. Amazon is also an existing investor in Future Retail, through its investment in promoter group company Future Coupons.
On 4 May, Icra downgraded Future Corporate Resources, a promoter group entity, to D, after it defaulted on coupon payments. “The firm informed it has sought a moratorium from investors; however, the same has not been approved," Icra said.
“Despite monetization of investments, total group debt has increased as on 31 December 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," it said.
Biyani’s debt problems have resurfaced after eight years, when the retail pioneer was facing a mountain of debt that it found too difficult to service as India’s economic growth hit a major rough patch.
That episode saw Biyani sell his apparel store business, Pantaloons, to the Aditya Birla group, and his financial services business, Future Capital, to Warburg Pincus.
Mint reported on 20 May that Future has hired investment bank Ambit to seek buyers for the group’s stake in its logistics business—Future Supply Chain Solutions Ltd. The company is a third-party supply chain and logistics service provider, offering warehousing, distribution and other logistics solutions to a wide range of customers in retail, fashion and apparel, automotive and engineering.
The group is also seeking buyers for its stake in insurance joint venture with Italy’s Assicurazioni Generali.