Premji fund buys 5% in Trent


March 20, 2014

Meghna Maiti, Financial Chronicle

Mumbai, March 20, 2012

Azim Premji, the billionaire chairman of Wipro, is once again turning his attention to the retail sector. His investment fund, PremjiInvest, has bought nearly half the shares on offer in the recently concluded qualified institutional placement (QIP) of the Tata group’s listed retailer Trent.

PremjiInvest has invested Rs 122 crore in Trent which runs the Westside chain and the Star Bazaar chain, according to a Trent disclosure to the Bombay Stock Exchange (BSE) on March 16. This makes PremjiInvest, with 4.91 per cent, the second largest shareholder after the Tatas who have 28.6 per cent in Trent.

PI Opportunities Fund – I bought 1.33 million of the 2.74 million shares on offer in the QIP.

The shares were sold at Rs 912 apiece last week and the issue was reportedly subscribed over two times. PI Opportunities Fund- I is a venture capital fund registered with SEBI.

Standard Chartered Securities (India) and JM Financial Consultants were bankers to the issue.

Other shareholders in Trent include the Xander group’s Siddhartha Yog, Norway’s Sovereign Wealth Fund and Government Pension Fund Global, as well as mutual funds and insurance companies.

For the nine months till December 2011, Trent reported a 21.6 per cent increase in sales to Rs 659.32 crore although its net profit slipped by 18.5 per cent to Rs 27.74 crore.

“Wipro is keen to invest in Trent because they can liquidate stake easily as it’s a listed firm. We should also not forget that Wipro has a big consumer products business and hence understands consumer-facing businesses,” said Devangshu Dutta, chief executive of the consultancy Third Eyesight.

Trent owns and manages a string of retail chains in formats such as Westside (lifestyle retail), Star Bazaar (hypermarket chain), Landmark (books and music chain) and Fashion Yatra (family fashion store). Trent also has a joint venture with Spain’s Inditex group to develop Zara Stores in India.

According to its QIP prospectus, Trent said it plans to use the funds for expansion, including setting up of retail stores and investments in certain retail real estate developments. The funds would be also utilised to meet working capital requirements.

Recent investments made by PremjiInvest include a 7 per cent stake purchase in ethnic retailer Fabindia and fund infusion in cancer care chain HealthCare Global. Shares of Trent closed up 1.18 per cent at Rs 942 on Tuesday on the Bombay Stock Exchange.

An earlier investment in the failed retailer Subhiksha had come a cropper. PremjiInvest had bought 10 per cent in Subhiksha from ICICI Venture in 2008 for Rs 230 crore. The Chennai headquartered retailer chain ran out of cash and went bankrupt and out of business. Subhiksha closed its nationwide network of 1,600 stores and defaulted on loans, vendor payments and staff salaries. In 2009 PremjiInvest sent legal notices to six serving and former directors of the retailer, charging them with not performing their duty and keeping investors in the dark about Subhiksha’s financial status.

(This is an edited version of an article that originally appeared in the Financial Chronicle on 20 March 2012.)