Bain Capital to buy stake in Lilliput for nearly $60 mn

Bain Capital to buy stake in Lilliput for nearly $60 mn

Mumbai: Private equity (PE) fund Everstone Capital and Sanjeev Narula, managing director of children’s apparel firm Lilliput Kidswear Ltd, will sell a part of their stake in the company to Bain Capital Advisors (India) Pvt. Ltd for nearly $60 million (Rs267 crore), according to two bankers familiar with the development.

This would be Bain’s second investment in India after its acquisition of Himadri Chemicals Ltd in January, when it bought a 35% stake for Rs580 crore.

Everstone will sell one-third of its 37% of its stake in Lilliput for around Rs100 crore, one of the two bankers said. Both the bankers spoke on condition of anonymity.

Narula, who started the company in 1989, owns a 67% stake in it. It was not immediately clear how much of this he would be selling. An email and a phone message sent to Narula on Tuesday remained unanswered at the time of going to press.

Lilliput and Everstone have appointed audit and consulting firm Ernst and Young India Pvt. Ltd to manage the sale.

The share sale by Everstone is part of an agreement with Lilliput to sell one-third of its stake before an initial public offering, a third during the public offer and the remaining after the public issue, the second banker said.

Everstone has invested Rs120 crore in the company in three transactions between 2006 and 2010.

This is the first retail PE deal in fiscal 2011. Until 8 March, only one PE deal worth $14 million has been recorded in the current fiscal in retail—a drop of 90% from the six deals worth $128 million in the previous fiscal, according to Venture Intelligence.

“The addressable kidswear market is Rs9,000-10,000 crore, growing at 13%," said Nilesh Hundekari, principal at AT Kearney, a consultancy. “(The) premium segment, where Lilliput is a player, is growing at one and half times the market rate."