Birla eyes stake sell after demerging Madura

The buzz in the media is that the Aditya Birla Group has directed Standard Chartered Bank to divest 25 percent stake in a new retail company to be

formed by merging Madura Fashion & Lifestyle, Pantaloons and More Supermarkets. It is learnt that the company plans to raise 500 million dollars (over Rs 3,000 crores), seeking a valuation of 2.5-3 billion dollars (over Rs 1,50,000 to 1,80,500 crores) through large private equity investors.

Carlyle Group, Apax Partners, KKR and TPG Capital are said to be in queue to grab the deal. The restructuring would also see Madura getting subsidiarised from the listed Aditya Birla Nuvo with public shareholding. Pantaloons and More will be merged with the demerged Madura and the combined entity is expected to be led by Madura with a projected valuation of 1.5-1.8 billion dollars (over Rs 9,000 to 1,8,000 crores) with Pantaloons and More being the smaller businesses by value in the restructured retail company.

Aditya Birla Group entered fashion retail with the acquisition of Madura for Rs 236 crores in 1999. It entered food and grocery retail following the acquisition of Fabmall and Trinethra supermarkets in 2007 and the department store chain Pantaloons was acquired from Kishore Biyani's Future Group in 2012.

Aditya Birla Retail (ABRL) recently borrowed Rs 500 crores from Yes Bank to grow its food and grocery business. The company, in its recent filing with the Registrar of Companies, said it has issued non-convertible debentures to Yes Bank for the amount.