Future Ventures –A Holding Company at a Premium ! – Avoid

The primary market has never been of interest to me but while going through this superb advertising of the above IPO which states an IPO at par made me look into the company.

Without going into the details the company has some investments and with the fresh money will be investing into other businesses. The current investments of the company are majorly into Future Consumer and Indus League which in no way generating major cash flows.

Further the prospectus says the company will invest the money over the next 3 years. So how do you classify this company – Mutual Fund , PE or a holding company. Overall i qualify this company as an attempt by the group to get money at zero interest 🙂

Future Ventures has major investments in two of its retailing enterprises and will continue to invest in other dream projects. And for all this projects the money will come from Future Ventures i.e from the gullible small investors who would be enticed by an issue at 10-11 Rs same way as new Mutual Fund Offerings NFOs seem more interesting then a consistent performer.

The whole growth and performance of the company relies on Kishore Biyani who did magic with Pantaloons but will he be able to do the same in next 5 yrs? with Future Ventures. Would you like to bet on just a one man Army? and that too give a premium to such levels. Risky Proposition in the medium term.

If one is to consider it to be a holding company of investments then all the best holding companies trade at 30-70% discount to their investments. Why should someone pay a premium!! :). Also from the past record it doesnt seem Future group likes to create business and sell it off so even if the investments are great and grow superbly in next 3-5 years will the company ever encash it by selling off their dream projects ! like aadhaar etc if it grows 10 fold also but will they sell it is a big question.

The company if had confidence in this venture they could have generated a NCD or Loans etc but the interest component of 10-12 % would be tough on the books so they found the public to be a better source of money.

All in all i would sum it up to be a great advertisement to generate 750 crores without much gains to the investors. Avoid:) is the view though there would be lot of supporters in the broking community. Maybe if the stock drops to 6-8 after IPO could be interesting.

The above view is personal and please do your own research 🙂 i can be horribly wrong also in this case.