SSG buys 40% stake in India's Future Supply Chain
Special situations investor SSG Capital Management Group will pay up to INR5.8 billion ($87 million) for a 40% stake in Future Supply Chain (FSC), a supply chain and logistics subsidiary of India's Future Retail.
The firm will acquire a 14% stake held by Future Retail and the management team, along with a 26% interest held by Fung Capital, the private equity arm of Hong Kong-based supply chain giant Li & Fung Group, which paid $30 million for the stake in 2009. The investment values the company at INR14.5 billion, according to a filing, and is expected to conclude by early May.
FRL currently owns 70.2% of FSC, and will continue to hold a majority after the sale, due to FSC's importance to its overall business. The company sees SSG's investment as a chance to strengthen its balance sheet in its ongoing efforts to reduce its debt through monetizing its investments. FRL's share of the purchase price will total INR1.85 billion.
For the year ended March 2015, FSC reported INR4.1 billion in revenue and INR250 million in profit. Its customers include companies in the food and beverage, apparel, lifestyle, electronics, healthcare and automotive sectors.
SSG is currently investing its third fund, which closed in 2014 at $915 million. The vehicle focuses on companies in the financial services, mining and metals, retail, and distribution sectors. In 2014 it acquired a 49% stake in Asset Care and Reconstruction Enterprise, which acquires distressed debts from Indian banks, for INR410 million.
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