Sector analysts said the deal would help bring down debt on the books of Future Enterprises, which at the end of FY19 stood at Rs 6,717 crore. This is a year-on-year increase of 15 per cent, the data from its financial results show.
In the past one year, the stock price of Future Enterprises has fallen about 18 per cent to Rs 20 a share.
“The Future Group
is also simplifying its structure,” said Abneesh Roy, executive vice-president, research, institutional equities, Edelweiss. “So far, retail assets sat in Future Enterprises, not Future Retail.
Now the retail assets will sit in Future Retail. This is a step in the right direction,” he said.
As of Friday, the market capitalisation (m-cap) of Future Enterprises stood at Rs 1,023 crore, a 3 per cent increase over the previous day. The company closed FY19 with consolidated sales of Rs 6,173 crore and a consolidated net profit of Rs 145 crore.
Last month, Japan’s largest logistics company, Nippon Express, bought 22 per cent in Future Enterprises’ subsidiary Future Supply Chain for Rs 646 crore. This was done through a primary issuance of shares as well as a secondary share purchase. Future Retail, which operates large and small format retail chains including Big Bazaar, fbb, Foodhall, EasyDay and Heritage Fresh, will soon open convenience stores under the 7-Eleven brand in Mumbai. The latter is Japanese-owned, but a US-headquartered company, with a presence across the globe.
Future Retail said on Saturday it would fund the acquisition of retail assets through existing channels available to it, including equity and debt. It would not raise fresh funds for the deal.
The company also said approval of its members would be sought at an extraordinary general meeting, to be held in Mumbai on November 8.