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W, Aurelia owner TCNS Clothing may file for IPO this year

LiveMint logoLiveMint 28-05-2017 Swaraj Singh Dhanjal

Mumbai: TCNS Clothing Co. Pvt. Ltd, which sells women’s apparel under the W, Aurelia and Wishful brands, has started discussions on an initial public offering (IPO), two people aware of the development said. New Delhi-based TCNS Clothing is backed by US-based private equity firm TA Associates.

“TCNS Clothing has started meeting investment banks to discuss an IPO. They plan to file for the IPO by the end of the year,” said one of the persons cited above, requesting anonymity as the talks are private. “However, talks with the banks are at a very early stage right now. The company is yet to decide on the stake that it would look to dilute in the offering, and whether it would be a pure primary offering or a mix of primary and secondary share sale,” this person said.

Brands of TCNS Clothing, founded by brothers Onkar and Arvinder Pasricha, are sold at more than 1,600 points of sale across India, Mauritius, Sri Lanka and the Middle East, and in over 350 exclusive stores in more than 100 cities. The three brands also have a strong presence across large multi-brand retailers and online portals. W’s first store opened in 2001 in Delhi.

According to the second person, the IPO should see strong interest from investors, who have shown keen interest in share sales by consumer brands in the recent past.

“Companies such as D-Mart witnessed very high demand for its share sale and investors were also rewarded handsomely on listing. Some other consumer companies such as Manpasand Beverages Ltd has given investors very good returns post IPO. W’s numbers are attractive and hence the company should be able to drive strong interest for its share sale, as and when it hits the market,” said the second person cited above.

D-Mart, which went public in March sold its shares at Rs299 each in its public offering, which was subscribed 104.5 times. On Friday, the company’ shares closed at Rs717.6 per share. Manpasand Beverages shares have risen to Rs845.05 per share, as of closing on Friday, from Rs320 when the company went public in June 2015.

According to filings with the Registrar of Companies, TCNS Clothing reported standalone revenue of Rs590.67 crore in 2015-16, up almost 65% from Rs348.75 crore in the previous financial year. Its profit more than doubled to Rs62.51 crore from Rs27.27 crore in the same period.

The company also reported an increase in its Ebitda (earnings before interest, taxes, depreciation and amortization) margin to close to 20% in 2015-16, from 16.5% in the previous year, RoC filings show.

Emails and text messages sent to Anant Daga, managing director at TCNS Clothing, went unanswered. Dhiraj Poddar, India head at TA Associates, declined to comment.

So far this year, six companies have raised Rs4,914.4 crore through initial share sales, data from primary market tracker Prime Database shows. In 2016, 26 companies raised Rs26,493.8 crore.

In August, TA Associates invested $140 million in TCNS Clothing. In June 2016, Mint reported that TA was in talks to acquire a stake of about 30-35% in TCNS, with existing investor Matrix Partners India selling its almost 20% stake and promoters 10-15% to raise fresh capital for funding expansion. Matrix had invested about Rs100 crore in TCNS Clothing since 2011.

“The women’s ethnic apparel market in India is largely unorganized and is undergoing a shift towards organized and branded. As the leader in branded women’s apparel, TCNS Clothing is driving this shift and providing the Indian consumer with a differentiated product and value proposition across its multiple apparel brands,” Naresh Patwari, director at TA Associates, said in statement while announcing the investment in August last year.

The Indian women’s apparel market is predicted to reach around $20 billion in 2020, up from $13 billion in 2015, a compound annual growth rate of 10%, according to Avendus Capital. The branded portion of this market, approximately 17% in 2015, is expected to surpass 38% over the next 10 years.

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