Future Supply Chain IPO aimed at giving exit to PE partner: Biyani

The upcoming initial public offering of Future Supply Chain Solutions Ltd (FSCSL), expected the garner over Rs700 crore, is primarily meant to give an exit to private equity firm Griffin Partners, Future Group chairman Kishore Biyani told PTI today.

Future Group chief Kishore Biyani

A subsidiary of Future Enterprises FSCSL has filed a draft red herring prospectus with the Securities and Exchange Board of India for the public issue of up to about 97.84 lakh equity shares representing 24.43 per cent of the existing paid-up equity share capital of FSCSL.

While private equity firm SSG Capital's entity Griffin Partners will sell about 78.27 lakh equity shares in FSCSL, representing up to 20 per cent of the paid-up equity share capital, the promoter company Future Enterprises will offload 19.57 lakh shares, representing around 5 per cent stake.

According to Biyani, FSCSL, the logistics arm of the group, is well capitalised and payment of debt or requirement of immediate funds is not the reason for the IPO.

"We have to give an exit to the private equity. The 5 per cent we are selling will go to Future Enterprises. This (FSCSL) is a good capitalised company and there is a very marginal debt of about Rs 32 crore long term debt," Biyani said.

It has been a dream run for the Future Group stocks in 2017 with Future Retail up over 400 per cent and both Future Consumer and Lifestyle giving shareholders returns over of 200 per cent each, CNBC-TV18 reports.

Kishore Biyani told the channel in an interview that the fashion and food categories are seeing continuous demand and he does not see any headwinds as far as demand is concerned on back of aspirations of a new India and formalization of the economy.

The fashion side has gained scale and size and Future has become a leader in its space, he said, adding that both Central and Brand Factory are also doing great.  The focus is on building the food business significantly, he added.

Future Group aims to sell around 30-5 crore garments next year, which will take us to the top 10 position in the world.

He said physical retail is growing and there is a layer of digital adding up to it, and both are converging into what is called as blended retail. So, the company is keenly looking to acquire an ecommerce player in fashion side of business but basically looking at a small player strong on technology that can help them scale up faster on fashion side of business.

When asked if they witnessed an uptick in digital payment post demonetisation, he said they have seen an uptick of 5-10 per cent in digital payments in their stores. Digitisation would be the norm now and see it becoming a payment mechanism across all businesses, he said.

He said the group has their own digital wallet called Future Pay and would be ending December with 5 million customers and that would go up to 2 crore over a period of time.

''Along with this we also plan to selling insurance and give credit to our customers, so basically we are looking at forming a non-banking financial company (NBFC) and have applied for a license,'' he said.

With regards to insurance business, he said they are looking forward of growing the business significantly. Our partner Generali is looking at increasing their stake in this business but we are not on a journey of listing this business, he confirmed.

Talking about IPO of Future Supply Chain business, he said they are ready to roll it out soon. He said it is a business which has been built on consumer logistics and has been GST compliant.

''The velocity and scale at which we operate, it is going to be interesting business because there are not many supply chain solution companies in this country,'' he added.

FSCSL is one of the largest third-party logistics service operators offering automated and IT-enabled warehousing, distribution and other logistics solutions.

Its customers include companies in sectors like retail, fashion, automotive and engineering, food and beverage, FMCG, ecommerce, healthcare, electronics and technology.

The company offers services in three key areas - contract logistics (warehousing, distribution and other value-added services); express logistics (point-to-point, less-than truck-load, time-definite transportation services); and temperature-controlled logistics (cold-chain warehousing, transportation solutions and distribution of perishable products).