Future Lifestyle sets up arm to monetise brands

In its efforts to raise Rs 450 crores funds, Future Lifestyle Fashions (FLF) has tranferred its holding in investee brands into a wholly-owned subsidiary FLFL Lifestyle Brands. The idea is to “FLF plans to raise Rs 450 crore by unlocking value in its stake in its investee brands portfolio,” FLF has said in a BSE filing. In another filing, the company said it has incorporated a wholly owned subsidiary company, FLFL Business Services with effect from March 27.

FLF says over the years, it has invested in multiple fashion brands backed by talented designers and entrepreneurs. It acquired both minority and majority stake in many of these brands. “FLF believes that each of these brands hold significant value and has immense potential in becoming leading brands in their respective segments,” it has said.

Meanwhile, FLF has post shareholders approval on March 24, transferred its holding in these investee brands into a wholly-owned subsidiary FLFL Lifestyle Brands (FLBL). Post the transaction, FLF will hold 49 per cent stake in FLFL Lifestyle Brands. While these investee companies will continue to be run independently by their respective entrepreneurs and professionals.

Considering these brands are still in their nascent stages of growth, the opportunity to unlock the full value from of these investments is couple of years away. This transaction enables FLF to create value by partially unlocking value in its stake. This transaction is aimed at adding further value for its shareholders by reducing FLF’s debt.

Moreover, a small portion of these funds will be used to boost up these brands. As these investments mature, there is still significant value creation potential for both FLF and investors by monetising stakes in these entities later.