India: Personal debt of Biyani a hurdle before RIL buying Future Group businesses

Future Group chairman Kishore Biyani. Photo: Hemant Mishra/Mint

A large loan of around Rs2,000 crore taken by Future Group-founder Kishore Biyani in his personal capacity is acting as a hurdle before the proposed deal entailing the acquisition of retail and lifestyle businesses of Future Group by Mukesh Ambani-promoted Reliance Industries Ltd.

Two persons directly aware of the ongoing discussions confirmed this, adding that a final decision on resolving the personal debt issue and conclusion of the Rs23,000-crore, all-cash deal may be taken within 10 days.

“The deal was supposed to be announced on 30 July, but negotiations got stuck on ways to tackle one large chunk of personal debt taken by Biyani as a promoter in Future Corporate Resources,” said the first person.

On 28 July, Mint reported RIL is close to buying Future Group’s retail assets to bolster its position in India’s retail segment.

FEL will then conduct a slump sale of its retail assets to a retail subsidiary of Reliance Industries Ltd.

As of 30 September, 2019, debt at Future Group’s listed companies increased to Rs12,778 crore from Rs10,951 crore as on 31 March, 2019.

Biyani’s 46% stake in Future Lifestyle is entirely pledged, and in Future Retail, too, three-fourth of his 42% stake is pledged.

The deal includes a takeover of Future’s liabilities by an RIL subsidiary.

FEL develops, owns and leases the retail infrastructure for the group, according to information on the company’s website. It also holds the group’s investments in subsidiaries and joint ventures, including insurance, textile manufacturing, supply chain and logistics.

RIL will also absorb partnerships that the Future Group has with foreign brands and retailers.

For instance, Future Retail had signed a master franchise agreement with 7-Eleven Inc. to develop and operate 7-Eleven stores in India. No stores have opened so far, but the business is expected go to RIL.

RIL is also likely to acquire a minority stake of around 15% in Future Consumer.

Biyani built a sizable organized retail business—since the late 1980s. In 1991, Biyani changed the name of his company to Pantaloon Fashion (India) Ltd. In 2001, it opened the first Big Bazaar store in India.

In July, rating agency Fitch downgraded Future Retail’s long-term issuer default rating to C after a missed payment of semi-annual interest on bonds. Two Future Group units have also missed their payments to Franklin Templeton funds, which are winding up.

RIL’s move to consolidate physical store business follows its attempt to enhance focus on its e-commerce initiative JioMart, where it has entered into a commercial agreement with messaging app WhatsApp to reach consumers.

This article was first published on livemint.com.

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.