Citicorp buys 15% in Flemingo

NEW DELHI: Citicorp Venture Capital International has finalised a deal to pick up 15% stake in Flemingo Duty Free Shops Pvt Ltd (FDSPL), which runs duty-free shops at various airports and seaports. The deal is valued at more than Rs 100 crore, according to information provided by FDSPL to the Foreign Investment Promotion Board (FIPB).

FDPSL would initially issue convertible preference shares to the Citigroup for about Rs 100 crore. These preference shares would be converted into equity at a later date for a premium, Flemingo has told FIPB. The Citigroup’s shareholding in FDSPL would be up to a maximum of 15% of the paid-up equity of the company.

FDSPL has sought FIPB approval to issue 10 lakh convertible preference shares for Rs 1,000 each to the Citigroup. The green signal from the Board is yet to materialise since the finance ministry plans to go into details of the deal.

FIPB deferred the FDSPL’s proposal pending completion of investigation and due action by revenue department, they added. Currently, Flemingo International, a company based in British Virgin Islands, holds 51.22% equity stake in FDSPL while various NRIs hold 24.87% stake.

After conversion of Citigroup’s preference shares; Flemingo International, NRIs and Citigroup would respectively hold 43.54%, 21.14% and 15% in FDSPL, taking the total FDI to 79.68%.According to highly-placed sources, revenue department officials informed FIPB members that investigations into the details of the deal are pending. Therefore, the FIPB deferred a decision on the deal after considering it at a recent meeting.

The revenue department under the finance ministry informed FIPB that the matter is under investigation, the sources said. The Directorate General of Export Promotion (DGEP), under the revenue department, pointed out that investigations in the case are expected to be completed shortly.

DGEP urged the board to put on hold FBSPL’s proposal to offer equity to Citigroup till the probe is concluded. While the revenue department has asked the FIPB to defer the proposal, department of economic affairs (DEA) and the department for industrial promotion & policy (DIPP) have raised no objection. DEA has conveyed no objection to the proposal subject to issue of preference shares being in conformity to SEBI, RBI and other statutory guidelines, the sources said.