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L Catterton, Kedaara in talks to buy 15% stake in Manyavar parent

LiveMint logoLiveMint 21-05-2017 Reghu Balakrishnan

Private equity (PE) funds Kedaara Capital and L Catterton are in separate discussions to buy a minority stake in Vedant Fashions, the owner of ethnic wear brand Manyavar, according to two people aware of the development.

The PE firms plan to acquire about 15% stake in Vedant Fashions for Rs450-500 crore, said one of the two people on condition of anonymity.

The company is valued at Rs3,000 crore, said the second person on condition of anonymity. The proposed fund will be used for expansion including acquisitions, he added.

Vedant Fashions has also joined the fray to discuss a possible acquisition of ethnic womenswear brand Soch in a deal valued at slightly more than Rs1,000 crore, The Times of India reported last week.

Founded by Ravi Modi in 1999, the Manyavar brand of garments is sold in over 400 stores. Vedant Fashions expects to increase that number to 600 by 2020. The stores are a mix of company- and franchisee-owned ones.

Mails, text messages and calls made to Modi were not answered. Sanjay Gujral, regional managing director at L Catterton Asia, and a Kedaara Capital spokesperson declined to comment.

Several global PE firms, sovereign funds and mid-market growth funds have shown interest in investing in Manyavar and approached bankers in Mumbai and Kolkata to start discussions with the company, Mint had reported last year. Modi has decided not to dilute his stake in the company unless the company decides to go for a large acquisition in India or abroad, an August 2016 Mint report said, citing people familiar with the company’s plans.

L Capital Asia, the Singapore-based private equity fund sponsored by LVMH Moët Hennessy Louis Vuitton, merged with American consumer-focused PE firm Catterton, to form L Catterton in January last year. L Capital which owned 16% in another leading Indian ethnic retailer Fabindia Overseas Pvt. Ltd had exited the investment in 2016 by selling the stake to PremjiInvest.

Kedaara was founded in 2011 by Manish Kejriwal, a former India head of Singapore’s Temasek Holdings Pte. Ltd; Sunish Sharma and Nishant Sharma, who were managing director and principal, respectively, of US-based PE fund General Atlantic in India. Kedaara raised its debut fund with a corpus of $540 million in 2013.

In April, a Kedaara Capital-led consortium comprising Ontario Teachers’ Pension Plan, invested $100 million in microfinance company Spandana Sphoorty Financial Ltd. Kedaara’s portfolio includes Mahindra Logistics Ltd, a third party logistics company; AU Financiers India Ltd, a Jaipur-based diversified non-banking financial company (NBFC); automotive parts maker Bill Forge; folding carton maker Parksons Packaging Ltd; Manjushree Technopack, a rigid plastics packaging firm and Hyderabad-based diagnostics chain Vijaya Diagnostic Centre Pvt. Ltd.

The Indian ethnic wear market was estimated to be worth Rs82,220 crore in 2014 and is expected to grow at a compound annual rate of 9% to reach Rs1.26 trillion in 2019, according to a November 2015 report from consulting firm Technopak Advisors.

The apparel market, especially women’s wear, in India has seen interest from PE investors in the past. PE investor TA Associates Management Lp had acquired a minority stake in TCNS Clothing Co. Pvt. Ltd, which owns the W brand of clothing for women for $140 million. Other noted investments include General Atlantic’s investment in Anita Dongre and Everstone Capital’s investment in designer wear brand Ritu Kumar.

The size of the Indian women’s apparel market will reach $20 billion in 2020, from $13 billion in 2015, growing at an annual average pace of 10%, according to estimates by Avendus Capital. The branded portion of this market, about 17% in 2015, is expected to exceed 38% in the next 10 years, it said.

Manyavar entered the women’s traditional wear segment with the brand Mohey in May last year.

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