Pantaloon Retail to raise Rs 1,260 cr

Kishore-Biyani promoted Pantaloon Retail will raise Rs 1,260 crore through an issue of equity shares to private investors and warrants to promoters for its expansion plans.

The company's board took the decision to this effect on August 18.

The retailer will issue 40 lakh equity shares at Rs 500 on a preferential basis to raise Rs 200 crore from the private investors. It will also raise Rs 1,060 crore through the issue of 2.12 crore warrants at Rs 500 each to promoters, Pantaloon Employee Welfare Trust and select employees.

The warrant holders have the option to acquire the same number of equity shares in one or more tranches within a period of 18 months from the date of issue of warrants.

The company has chalked out plans to roll out a chain of fair price stores and hypermarkets across the country to tackle the competition from retailers such as Reliance Retail, Aditya Birla Retail's More, RPG Group's Spencer, Subhiksha and others.

The company's board also gave its nod to the public issue of its finance arm, Future Capital Holdings (FCH), for 10% of the post-issue capital. FCH runs asset management and consumer credit businesses.

Pantaloon Retail holds nearly 74 per cent stake in Future Capital and hedge fund Och-Ziff Capital holds another 10 per cent in the company.

According to investment banking estimates, Future Capital is valued at around Rs 3,000 crore.

Accordingly, Pantaloon's stake is valued at Rs 2,200 crore or Rs 140 a share. Following the news of Future Capital's IPO, Pantaloon Retail's shares went up 2.55 per cent to touch Rs 489.20 at close on the Bombay Stock Exchange today.

''The IPO will come out in another three months. We will use the funds mainly for the expansion of Future Money outlets and the rest for promotion of new ideas and ventures,'' said Future Capital CEO Sameer Sain.

The company has ambitious plans to roll out 400 Future Money outlets to provide consumer credit. Future Capital also has plans to set up a $ 500 million logistics fund and a residential real estate fund.

Pantaloon's board also approved an investment of Rs 325 crore in Pantaloon Future Ventures, a wholly-owned subsidiary of the company, for making investments in Future Ventures India, which has been set up to undertake new businesses, incubation of new ideas and businesses and getting into joint ventures, etc.