What Future Group Minority Shareholders Get From Reliance Deal

While on paper shareholders of all Future Group entities stand to gain, much depends on how the Future Enterprises stock moves in the next few days and weeks. One possible negative can be private group companies with high debt and negative net worth merging with Future Enterprises.

Future Enterprises stock will start pricing in the debt on books and the low scalability of the remaining business after sale of the prime assets to the Reliance Group, said one market participant who didn’t want to be identified.

According to Abhimanyu Sofat, head of research at IIFL Securities, since Reliance is also taking stake in the company post slump sale in remaining business, this will be comforting for Bank of India, State Bank of India, Axis Bank, Canara Bank and RBL Bank, lenders to Future Group entities. A slump sale—when a business is sold for a lump sum without assigning values to its parts—also means no open offer for minority shareholders, which may disappoint some investors, he said.