Future Retail to raise Rs 2,000 crore from promoters for equity infusion
today Feb 7, 2019
Future Retail will raise Rs 2,000 crore ($301 million) from its promoters with the aim of doing away with lease rentals in the coming year and a half, the business said in a statement to the Bombay Stock Exchange.
In order to lower rentals for its brick-and-mortar store network, Future Retail aims to invest Rs 2,000 crore in the business, raised by promoters and management. As rental costs are some of the most significant costs born in the offline retail industry, such an equity infusion could greatly cut costs for the future.
"Promoters and management are highly motivated to contribute towards an integrated growth for Future Retail,” read Future Retail’s statement to the BSE as accessed by ET Bureau. “To this extent, promoters are committing an equity infusion of Rs 2,000 crore at a price of Rs 505 per share… The endeavour is to completely do away with lease rentals in next 18 months."
As the business’ stocks had closed on the BSE on February 4 at Rs 444.6 a piece, the promoters had committed to a 13 percent premium as they pledged to buy at Rs 505 a piece.
Future Retail, promoted by Kishore Biyani, stated that the exercise will aid both margins and sales growth. The fund infusion will follow the Rs 3,000 crore raised just a month ago by the business’ family office. AION Capital Partners has also recently invested Rs 1,400 crore in a Biyani family holding company and funds have also come from Generali Group for the joint venture Future Generali. The US footwear brand Skechers also has a joint venture with a Future Group business.
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