After expressing interest, both the behemoths changed their plans as the valuation of Future Group assets were ‘too high’, say sources Reliance and Adani, two of the largest business groups led by top billionaires - Mukesh Ambani and Gautam Adani - have backed off from their initial move to acquire Future Group’s assets. While both the conglomerates are tight-lipped about their latest moves, sources say, steep valuation of the Future Group assets that are under hammer led them to change their plans.
According to sources familiar with the developments, Mukesh Ambani’s Reliance Group was keen on purchasing several assets from whatever is left of the Future Group after the former took control of most of its prominent physical retail assets. However, Kishore Biyani-founded Future Group continues to own assets like the Future Retail’s flagship brand Big Bazaar. Sources say, Reliance Group was interested in purchasing the brand along with its sister retail chain brands like fbb, CENTRAL, aLL and Brand Factory.
Additionally, Future Group’s assets in warehousing and supply chain, which were built on latest tech and are located at prominent locations, were on Reliance’s radar. However, the valuation didn’t suit the diversified conglomerate’s plans. As per a source, the above-mentioned assets were valued at over Rs 9,000 crore, which led the Reliance Group management to change their stance.
Adani Group, on the other hand, had expressed its interests in several Future Group assets through one of its real estate arms but changed its plans later.
Request for comments to Reliance and Adani Group, respectively, remain unanswered.
According to Jay Gandhi, AVP at HDFC Securities, the groups’ decision to back off was based on sound financial prudence. “Future is left with hardly any assets that can be sold to pay off the debt its creditors are claiming. I think, it was the right decision for Reliance, for instance, to back off as the valuation was unlikely to compensate for the return it would have delivered,” Gandhi told Business Today.
The latest round of acquisition bids began last year after Future Group’s creditors approached National Company Law Tribunal (NCLT) in Mumbai to recover their dues. As per their estimate, the once leading retail venture owes Rs 21,555 crore to its creditors, of which Rs 19,183 crore has been admitted as of March 2023. Operational creditors, including employees, government agencies, and vendors have claimed dues worth Rs 9,300 crore, out of which Rs 8,230 crore has been admitted.
To ease the selling of Future Group assets, the authorities have divided them into five clusters. While Cluster 1 comprises of the core business of Future Retail, including its large and small format retail stores, there other four clusters are comprised of gourmet foods business, WH Smith, inventory and fixed assets like furniture and fixtures at stores, among others.
In the latest round of bidding, six companies, including second hand office furniture dealer like Goodwill Furniture, have submitted their bids.