PremjiInvest buys 6% stake in Future Retail for ₹1,700 crore

Mumbai: PremjiInvest, the family office of Wipro chairman Azim Premji, has picked up 6% stake in Future Retail Ltd, the company said. PremjiInvest bought the stake in a bulk deal from Cedar Support Services Ltd, a subsidiary of Bharti Ventures Ltd.

The move comes weeks after the family office sold some of its stake in Future Lifestyle Fashions Ltd (FLF), another Future Group firm.

The transaction is valued at ₹1700 crore and the retail arm of Future Group will see an inflow of ₹600 crore following a claw-back arrangement between Future Retail and Bharti Ventures, a person close to the deal said on condition of anonymity.

According to the claw-back agreement, if the deal value for the entire 9.2% stake is between ₹950 crore and ₹1,450 crore, Future Retail would get 50% of the amount over ₹950 crore. If the deal is between ₹1,450 crore and ₹1,950 crore, Future Retail would get 60% of the amount over ₹1,450 crore and if the deal value is greater than ₹1,950 crore, Future Retail would get 75% of the amount over ₹1,950 crore, Abneesh Roy, senior vice-president, institutional equities, Edelweiss Securities Ltd, explained in a note on Thursday.

The total clawback to Future Retail would be ₹962 crore in case the deal value is ₹2,500 crore for the entire 9.2% stake, according to Roy.

Last month, PremjiInvest sold 4% stake to Singapore-based private equity firm L Catterton Asia, which bought a total 10% stake for about ₹780-800 crore in Kishore Biyani’s lifestyle arm FLF. The remaining 6% came from promoters who divested 4% and a primary issue of 2%.

Earlier in May, Biyani had told Mint that he is in discussions with some of the world’s biggest retailers, technology companies and strategic investors, including Amazon.com Inc, the Walmart-Flipkart combine, Alphabet Inc.’s Google, Chinese firms such as Tencent Holdings Ltd and Alibaba Group Holding Ltd, and Japan’s SoftBank Group Corp, to divest up to 10% equity.

An announcement on the possible partner could be expected in the next two to three months, according to the person quoted above. Future Retail did not publish any official statement on the block deal.

Future Retail gained 0.62% to close at ₹571.40 per share on Thursday on the BSE, while the Sensex gained 0.81% to close at 35,463.08 points. Future Consumer Ltd gained 3.38% to close at ₹53.55 per share, while FLF gained 0.59% to close at ₹440.35 per share.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.