Mumbai: Textile and apparel firm S Kumars Nationwide Ltd is set to buy an Italian shirt company for €75 million (Rs475 crore), according to a senior executive at a foreign investment bank, who did not wish to be named.
“The deal is expected to be signed by the end of this month,” the investment banker said.
Nitin S. Kasliwal, managing director and vice-chairman of S Kumars Nationwide, confirmed that a deal is in the offing but declined to name the target company, citing corporate governance norms. He said he expects the deal to be finalized by October.
The investment banker mentioned in the first instance said some banks have been approached to fund part of the acquisition. He added that the company has received an informal nod from some foreign banks in this regard.
Kasliwal, however, said the funding for the acquisition has already been tied up and the company has not approached any bank for this.
According to another official at an investment bank, who also did not want to be identified, the company has not hired any domestic merchant bank but has appointed an Italian firm for advice. It has also engaged a law firm.
In May, S Kumars Nationwide acquired a controlling stake in Italian fabric manufacturer, Klopman International. S Kumars was advised on the acquisition by investment bank Meghraj SP Corporate Finance Pvt. Ltd, consulting firm Grant Thornton Llp. and Italian merchant bank Studio Legale Delfino e Associati Willkie Farr and Gallagher Llp.
Earlier, S Kumars Nationwide had sought help from Swiss bank UBS AG, London-based investment banking boutique Euromax Capital Ltd and Mumbai-based Prime Securities Ltd for its fund-raising activities, including a qualified institutional placement, or QIP, in 2007 and a $220 million fund infusion in its subsidiary Reid and Taylor (India) Ltd by Government of Singapore Investment Corp. Pte Ltd, also known as GIC.
In July, GIC invested Rs900 crore in Reid and Taylor to acquire a 25.4% stake.
In a report dated 17 July, Darshan Singh Bagga, textile and retail analyst with Prime Broking, said: “The company now plans to focus on high-value fine cotton business, a high margin business.”
According to Prime Broking, the funds raised would also be partly used for international acquisitions, to build a global presence.
Reid and Taylor plans to open 341 stores across the country by 2009-10, each with an average area of 1,700 sq. ft per store.
The company reported revenues of Rs535.15 crore for the first quarter of fiscal year 2008, a growth of 41.1%, and profit after tax of Rs55.09 crore against Rs42.66 crore in the previous quarter of last year.
Shares in S Kumars Nationwide lost 2.66% to close at Rs67.70 each on Friday, a day when the Bombay Stock Exchange’s benchmark Sensex lost 2.79%.