RIL to buy Future Group’s retail, related units for ₹24,713 crore

Mumbai: Reliance Industries on Saturday said its unit Reliance Retail Ventures (RRVL) is acquiring the retail & wholesale business and the logistics & warehousing business from the Kishor Biyani-promoted Future Group as going concerns on a slump sale basis for a lump sum amount of Rs 24,713 crore.
Analysts say the deal marks the company’s transition away from its energy business, towards becoming a consumer-focused retail and telecom company.

The oil-to-telecom major, which is boosting its presence in the retail segment through Reliance Retail, said the acquisition is being done as part of the scheme in which Future Group is merging certain companies carrying on the aforesaid businesses into Future Enterprises (FEL).

In a separate press release, FEL said its slump sale would include key formats such as Big Bazaar, fbb, Foodhall, Easyday, Nilgiris, Central and Brand Factory. RRFLL also proposes to invest Rs 1,200 crore in the preferential issue of equity shares of FEL to acquire 6.09 per cent of post-merger equity, and Rs 400 crore in a preferential issue of equity warrants which, upon conversion and payment of balance 75 per cent of the issue price, will result in RRFLL acquiring further 7.05 per cent of FEL.

The Future Group was under pressure due to piling debt and servicing issues, and the stake sale to RIL was best fit for them as they were compelled to sell assets. RIL had a war chest after the mega fund raising. For RIL, they now need not build the wholesale, logistics and warehousing unit,” said Hemang Jani, Head – equity strategy, broking & distribution at Motilal Oswal Financial Services.

Future Group’s net debt burden had piled up to around Rs 12,989 crore with the entire promoter holding pledged with lenders. On August 24, the group managed to avert a default by making a payment of Rs 100 crore or $14 million on its foreign bonds.

“The market had more or less discounted the deal, and broad contours were also known. It is a rescue for the highly indebted Future Group and its promoters,” he added
The deal will help Reliance Retail accelerate its support to millions of small merchants in increasing their competitiveness and enhance their income during these challenging times, the firm said in a statement.

“We hope to continue the growth momentum of the retail industry with our unique model of active collaboration with small
merchants and kiranas as well as large consumer brands,” Isha Ambani, Director, Reliance Retail Ventures, said.