Home Solutions has raised two rounds of funding from ICICI Venture and Kotak SEAF India Fund.
Kishore Biyani's Pantaloon Retail (India) Ltd is merging its subsidiary Home Solutions Retail (India) Ltd with itself.
India's largest retailer said, in a filing to to the exchanges, that its board has approved demerger of the consumer durable, home furnishing, home improvement and furniture business from Home Solutions into Pantaloon.
Home Solutions has raised two rounds of funding from ICICI Venture and Kotak SEAF India Fund. The two private equity funds invested Rs 120 crore in Home Solutions back in 2006. ICICI Venture and Kotak SEAF also invested in the Rs 150 crore rights issue by the company in early 2009. The move is likely to give these investors liquidity and avenue for an eventual exit.
Pantaloon last year said, it was considering merger with Home Solutions to "have better synergy and efficiency in the retail business."
Home Solutions is a retailer of products like electronics, consumer durables, furniture and home improvement products, which are retailed under different brand names. These include eZone (high end consumer electronics specialty store), Collection I (luxury furniture & furnishings) and HomeTown (home improvement store).
Currently Pantaloon holds nearly 67% stake in Home Solutions while the rest is held by other shareholders, which includes ICICI Venture and Kotak SEAF. These other shareholders will now be allotted equity and preference shares in Pantaloon Retail in lieu of their stake in Home Solutions.
For nearly 10 million shares of Rs. 10/- each of Home Solution, Pantaloon will allott 5,928,818 equity shares of Rs. 2/- each and 6,347,635 preference shares of Rs. 100/- each. The preference shares will be convertible into one equity share of Pantaloon within twelve months from the date of allotment or July 31, 2011, whichever is earlier, according to the filing.
These shares, including the preference shares upon conversion, would be worth Rs 470 crore based Pantaloon's closing price today of Rs 383.3. The deal is subject to approval from the shareholders, court and other authorities.
According to its latest annual report, Pantaloon has invested Rs 165 crore in Home Solutions business till June 2009. It operates retail formats like Home Town, E-zone, Home Bazaar, Furniture Bazaar and Electronics Bazaar. During FY09, Home Solutions registered an income of Rs 1,071 crore and a loss of Rs 5.73 crore. Source: VCCircle
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