Feb 15, 2010
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India's Future Group eyes tie-up, unit IPO

Feb 15, 2010

MUMBAI (Reuters) - India's Future Group, which runs the country's largest listed retailer Pantaloon Retail (PART.BO), is pursuing talks for a foreign tie-up and hopes to file papers for an IPO in its investment arm soon, the group's CEO said.

Pantaloon retail

Kishore Biyani said the group was in talks with many overseas retailers but did not identify them, although there have been media reports of French retailer Carrefour (CARR.PA) was one of the contenders.

"There is a lot of speculation about a lot of players and one of the names that comes up is Carrefour ... but that doesn't mean that we are tying up with them," he said in an interview on Monday 15 February.

Carrefour has said it planned to open its first cash-and-carry outlet in India in early 2010.

A tie-up with a global retailer would provide the Future Group expertise in retail, sourcing of raw materials and funds, Biyani said.

Indian rules allow up to 51 percent foreign direct investment in single-brand retailers, but multi-brand retailers such as Carrefour and Wal-Mart (WMT.N) cannot sell directly to customers.

Wal-Mart has a cash-and-carry venture with India's Bharti Enterprises. Germany's Metro AG (MEOG.DE) has wholesale stores while Tesco TSC.L has tied up with the Tata Group.

Future Group plans to add 3 million square feet of space annually with an average investment of 10 billion rupees ($216 million) and aims to have annual revenue of $6-$7 billion in the next five years, Biyani said.

In 2008/09 flagship Pantaloon, which contributes about 90 percent to group revenue, had consolidated revenue of $1.7 billion.


Future Ventures, an investment arm of the group, would file initial papers in the next 30-45 days for an initial public offer. The unit has invested in three companies in India, including the Indian franchisee of Dollar Stores International.

"We are going to look at rural retail opportunity out of that company," Biyani said, adding Future Ventures would also drive the group's expansion in the food and fashion business.

He did not say how much the unit plans to raise. Last year, he had said the group aimed to raise more than 10 billion rupees through the sale of shares.

The group had intended to float Future Ventures in 2008, but the process was delayed in the wake of the financial crisis, an economic slowdown and a stock market collapse.

The foods business, which contributed about 30 percent to total revenue, would be consolidated under one entity, he said with annual revenue from it reaching 10 billion rupees in the next three years from 2 billion now.

The group recently spun off hypermarket chain Big Bazaar and supermarket Food Bazaar into a separate unit called Future Value Retail.

Biyani ruled out any immediate plans to list the company saying the restructuring was done to segregate value retailing from lifestyle retailing.

Pantaloon competes in the domestic market with Vishal Retail (VIRL.BO), Shoppers Stop (SHOP.BO) and Tata group's Trent (TREN.BO).

Shares in Pantaloon, worth $1.8 billion, fell 2.2 percent to 414.90 rupees while the main index .BSESN fell 0.7 percent. It has risen nearly 9 percent in 2010.

The Indian retail market is estimated at about $450 billion with organized retail having a share of 6 percent.

(Editing by Ranjit Gangadharan)

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