Private equity firm ChrysCapital Advisors LLP is in advanced talks to buy Credo Brands Marketing Pvt. Ltd, which owns denim wear brand Mufti, two people aware of the development said.
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The deal is likely to be signed for Rs460-500 crore,people with direct knowledge of the matter said. Mufti, retails through more than 1,400 multi brand outlets and 120 large format stores. At its peak of expansion, the brand had more than 250 exclusive stores.
Credo Brands that owns Mufti, was founded by Kamal Khushlani in 1998. It makes T-shirts, shorts, sportswear and blazers.
Kamal holds a 65% stake in the parent company, leaving rest with a set of investors, mostly high net worth investors. He, along with some of the investors, is selling stakes in the company that will give ChrysCapital a controlling stake. The deal is estimated to value the company at about Rs 750 crore. JM Financial is advising on the transaction process.
ChrysCapital, the largest India-focused private equity investor, sees scope in strengthening the home-grown brand which fits with the country’s young consumers, who seek to blend western fashion with the Indian spirit.
The denim wear market in India is projected to grow at a compound annual growth rate of 15% to reach Rs27,200 crore by 2018, according to a 2015 report by retail consulting firm Technopak Advisors. Leading brands in India’s denim wear market include Levi’s, Lee, Wrangler, Spykar, Numero Uno and Killer.
India’s Apparel Space
Venture Capitalists and PE firms have been eyeing India’s apparel in the past few years.
- Private equity (PE) funds Kedaara Capital and L Catterton are in separate discussions to buy a minority stake in Vedant Fashions, owner of ethnic wear brand Manyavar. The PE firms plan to buy a stake of about 15% in Vedant Fashions for Rs450-500 crore, at a valuation of Rs3,000 crore.
- In October last year, Multiples Alternate Asset Management, a private equity (PE) fund, acquired a 10% stake in branded apparel company Arvind Ltd—which sells apparel brands Calvin Klein, Tommy Hilfiger, US Polo Assn., Ed Hardy, Arrow, Gant and Nautica in India—for Rs740 crore.
- Besides, in August last year, US-based PE firm TA Associates invested $140 million for a minority stake in TCNS Clothing, a leading women’s apparel platform that sells popular fashion brand W.
Presently, India’s apparel and lifestyle market is estimated to be $92 billion industry. Country’s apparel exports grew by 4.7 per cent from July 2016 to February 2017. It is the fastest growing category in ecommerce and reaches 24 per cent of online consumers in India. To attract more FDI in retail sector, government is considering allowing 100% foreign investment through automatic route in single-brand retail to attract a larger number of global players in the sector. Favourable conditions can attract investments worth $11 billion in the space and create one crore new jobs in 3 years.