Business - Subhiskha to raise $80-100 million from FIIs

Close on the heels of the news of Wipro’s Azim Premji taking a 10 per cent stake in discount retail chain Subhiksha, the company now plans to raise $80-100 million by an investment from large foreign institutional investors (FIIs).The investment through a clutch of three FIIs will come through the listed arm Subhiksha India Ltd. The deal, according to sources, which will give the FIIs a 9 per cent stake, is on the verge of being inked.Funding expansion According to sources in the group, the retail chain is raising the money to fund the expansion of its grocery retail chain and also to foray into the consumer durables space. The valuation is expected to be significantly higher – at least one-and-a-half times — than the Rs 230 crore Mr Premji’s investment arm, Premji Invest, has paid to take a 10 per cent stake in Subhiksha.Subhiksha had, two months ago, taken over a little known company, Blue Green Constructions listed on the Chennai Stock Exchange. The merged entity being renamed as Subhiksha India Ltd will seek listing on the BSE and NSE. FIIs are allowed to invest up to 24 per cent in listed retail companies as portfolio investments. The company’s capital base of Rs 32 crore is expected to increase to Rs 35 crore while net worth of Rs 260 crore will rise to Rs 660 crore post this investment. Shareholding All the investors in Subhiksha would see a proportionate dilution in their stakeholding. While ICICI Ventures holds 23 per cent, the promoters led by Mr R. Subramanian, Managing Director, hold 59 per cent. The other significant investors would be Mr Azim Premji with 10 per cent and ICICI Prudential with 5 per cent stake.The retail chain has been on a scorching expansion path and has 1,590 stores in grocery retail and in mobile phones. By early next year it expects to foray into the consumer durables space. By June it expects to have over 100 stores up and running with a total space of 20 lakh square feet and would be located across 65 cities, including metros and Tier I and II cities.