Innerwear firm Dixcy eyes Rs300 crore PE fundraising

Dixcy is in the process of hiring investment bank Avendus Capital to advise it on the transaction

Graphic: Ahmed Raza Khan/Mint
Graphic: Ahmed Raza Khan/Mint

Mumbai: Dixcy Textiles Pvt. Ltd, the owner of the Dixcy Scott underwear brand, is planning to raise about Rs300 crore from private equity investors, according to two people familiar with the development.

Dixcy is in the process of hiring investment bank Avendus Capital Pvt. Ltd to advise it on the transaction, one of the two people cited above said, requesting anonymity.

Tirupur, Tamil Nadu-based Dixcy, which reported a revenue of about Rs700 crore in the year ended 31 March, is likely to be valued at Rs3,000 -3,500 crore, the second person said on the condition of anonymity.

Founded in 1982, by Prem Prakash Sikka, Dixcy Textiles (formerly Prem Hosiery) makes men and women’s apparel, T-shirts, pyjamas and underwear. The firm is fully owned by Sikka and his family.

Emails sent to Prem Sikka, founder and managing director, and Rahul Sikka, director, on Friday went unanswered.

A spokesperson for Avendus Capital declined to comment.

“The innerwear category sees a lot of repeat sales and has low fashion risk. This makes the category achieve standardization and scale. It also commands good margins, making the sector attractive for investors,” said Ankur Bisen, senior vice-president, retail and consumer, at consultant Technopak Advisors.

Smaller brands still dominate the underwear market, Bisen said. Converting that segment to branded products presents a big opportunity, he added.

Dixcy competes with Page Industries Ltd, the licensee for the Jockey brand in India, Rupa & Co. Ltd, the owner of MacroMan, Frontline and Euro brands, Lux Industries Ltd, the owner of Lux Cozi brands and Dollar Industries Ltd, which sells brands such as Bigboss and Club, in India.

“The success of Jockey and Page Industries in the category made the sector interesting for opportunities of value creation,” Bisen said.

Private equity fund Nalanda Capital is the largest institutional shareholder in Page Industries with a 9.96% stake, followed by Cartica Capital with 7.8%. Steadview Capital, an investor in Flipkart and Ola, also holds 3.73% stake in Page.

The potential of the sector has attracted several new companies in the recent past.

Last week, Aditya Birla Fashion and Retail Ltd entered the men’s premium innerwear and sportwear market by introducing a new range under the Van Heusen brand.

In August, British denim wear brand Pepe Jeans London announced its plan to sell its range of underwear across top 20 stores of the company.

The men’s innerwear market is pegged at Rs7,450 crore and is growing at 9% annually, according to a 2015 report by Technopak Advisors.

In the men’s innerwear market, low-priced or economy segment accounts for 53% of sales. The mid-price segment contributes 32%, and the premium and super premium segments together constitute 15%.

It is expected that the premium and mid-price segments will grow the fastest, and exponentially, in the next few years as consumers warm up to bigger brands even as they seek comfort, hygiene, and better prices, the report added.

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