Mumbai: Vedant Fashions Pvt. Ltd, owner of the ethnic wear brand Manyavar, is set to acquire Hyderabad-based rival Mebaz after talks to acquire womenswear brand Soch fell through, two people aware of the development said on condition of anonymity.

Vedant had been in discussions with Soch Apparels Pvt. Ltd since April this year to buy Soch in a proposed deal worth Rs1,200 crore, said one of the two people. The reason for the talks failing is not yet clear.

Private equity (PE) firms Kedaara Capital and L Catterton are in separate discussions to buy a minority stake in Vedant, Mint reported in May. The PE firms plan to buy a stake of about 15% in Vedant for Rs450-500 crore, the report said.

Vedant Fashions is valued at Rs3,000 crore, said the second person. The proposed fund-raising will be used to fuel acquisitions for a pan-India presence, he added. Mebaz was set up by Devanand P. Jethwani in 1971, and is presently run by his sons Sagar and Manoj Jethwani. Currently, Mebaz has about 18 stores across Telangana, Andhra Pradesh, Karnataka, New Delhi and Ahmedabad.

Text messages and calls to Vedant Fashions chairman and managing director Ravi Modi were not answered. Soch Apparels managing director and CEO Vinay Chatlani declined to comment, while Mebaz director Manoj Jethwani could not immediately be reached for comment.

Started by Modi in 1999, the Manyavar brand of garments is sold in around 450 stores across 173 cities in India, the US, Bangladesh, Nepal and the UAE. Vedant Fashions expects to increase that number to 600 by 2020.The stores are a mix of company- and franchisee-owned outlets.

Manyavar, a household name in men’s ethnic wear, entered the women’s traditional wear segment with the brand Mohey in May last year. Several global PE firms, sovereign funds and mid-market growth funds have shown interest in investing in Manyavar and approached bankers in Mumbai and Kolkata to start discussions with the company, Mint reported last year.

Modi has decided not to dilute his stake in the company unless the company decides to go for a large acquisition in India or abroad, an August 2016 Mint report said, citing people familiar with the company’s plans. The Indian ethnic wear market was estimated to be worth Rs82,220 crore in 2014 and is expected to grow at a compound annual rate of 9% to reach Rs1.26 trillion in 2019, according to a November 2015 report by consulting firm Technopak Advisors.

According to estimates by Avendus Capital, the size of the Indian women’s apparel market will reach $20 billion in 2020, from $13 billion in 2015, growing at an annual average pace of 10%.

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