Birla's stake sale in retail holding company gets lukewarm response from PE investors

The Aditya Birla group is not happy with the offers it has received from private equity firms such as LVMH's L Capitalfor a stake in its proposed holding company for all its retailventures.

 

Birla is looking to sell 10% each in the new company to two private equity firms for $400 million, with a valuation of $2 billion Stock Market Tips

 

According to sources, L Capital has put in the final bid for the 10% stake at less than $200 million. IFC, another contender in the fray, is having discussions with Birla group on valuations and in the process of putting its final bid, sources said.

 

Another suitor Singapore's Temasek is yet to put in its bid Intraday Trading Tips

 

The new company would include brand company Madura, fashion retail chain Pantaloons and supermarket chain More. The valuations are down mainly due to the accumulated losses of More, say sources. 

 

Pantaloons posted a loss of Rs 43.49 crore in the quarter under review compared to Rs 43.5 crore in the same period last year. However, Pantaloons'revenues grew 14% year-on-year to Rs 554 crore, driven by 8.9% like-to-like sales growth in the Pantaloons stores Commodity Trading Tips

 

Aditya Birla Retail, which runs stores under More brand and sells food staples, has piled up losses of nearly Rs 4,800 crore after seven years of operation. ABRL's losses widened from Rs 583 crore in 2012-13 to Rs 596 crore in FY14.

 

"IFC is also negotiating with Birlas on the valuations. Birlas are not certainly happy with valuations they have received till now," said the source. However, the source dismissed the rumours that the deal would be called off Nifty Trading Tips

 

"The deal is on track. Birlas need money to reduce debt in More and in Pantaloons," he said. When contacted, the Aditya Birla spokesperson declined to comment.

 

According to the plan, Birla was to sell another 10% in the new entity after the deal with the PEs Financial Astrology Trading Tips