BackMyntra to get $15-20 mn from PremjiInvest
Investment is part of a larger funding round of about $50 million that Myntra expects to close over the next 10 days
Premium
Mumbai: PremjiInvest, the private investment venture of billionaire Azim Premji, is investing $15-20 million in Myntra.com, one of India’s biggest online clothing and footwear retailers.
This will be the first online retail investment out of the $1 billion corpus at PremjiInvest, which has previously invested in traditional retail ventures like ethnic retailer Fabindia and Trent Ltd, the retail arm of Tata Group.
The investment is a part of a larger funding round of about $50 million that Myntra expects to close over the next 10 days. Existing investors Tiger Global, Accel Partners and at least two new global investors are likely to participate in the funding, said three people directly involved with the transaction.
“PremjiInvest is investing about $20 million while the others will bring in the rest. PremjiInvest is the largest investor in this round," said one of the three persons cited above, all of whom did not want to be identified.
PremjiInvest’s chief investment officer Prakash Parthasarathy declined to comment.
Working quietly since 2006, PremjiInvest has invested in more than 40 companies (both listed and unlisted), including HealthCare Global Enterprises Ltd, Carnation Auto Services Pvt. Ltd and Hector Beverages Pvt. Ltd, among others.
PremjiInvest was also an investor in the beleaguered retailer Subhiksha Trading Services Ltd. In 2008, PremjiInvest bought 10% stake in Subhiksha for ₹ 230 crore from ICICI Venture but in April 2010, CNBC-TV18 reported that the investment firm may write off its investment. Mint could not independently confirm this development.
The experience, however, did not diminish PremjiInvest’s appetite for retail investments, and it subsequently went on to fund other retail ventures.
Since it launched in 2007, Myntra has raised more than $70 million from investors, including Accel Partners and Tiger Global. Though it started as a seller of personalized gift items to companies, it now sells over 500 brands including Adidas, Nike, Inc.5, United Colors of Benetton and FCUK. The company is aiming to double its turnover from ₹ 400 crore in 2012-13 to ₹ 800 crore in 2013-14, its co-founder Ashutosh Lawania told reporters in May.
One of Myntra’s top executives confirmed the new funding round, requesting anonymity. Myntra’s founder Mukesh Bansal declined to comment, citing non-disclosure agreements.
Emerging economies such as China, India and Brazil are seeing a rapid growth in their apparel retail markets. It is projected that the per capita apparel consumption will increase by approximately 50% in China and 25% in India between 2011 and 2015, according to a white paper titled Textile and Apparel Retailing by retail consultancy Technopak Advisors Pvt. Ltd, released in mid-January.
“E-tailing offers a host of advantages to apparel brands and thus has the power to transform traditional retailing economics," the white paper said. Growing Internet use is also adding to the optimism surrounding e-tailing.
The number of active Internet users in India is around 120 million, up from 75 million in 2010, according to the Internet and Mobile Association of India.
While online retail currently contributes only a fraction of the retail revenues, the segment is estimated to grow from $1 billion, around 0.2% of the total retail market, to $56 billion, or 6.5% of the market, by 2023, according to a September report by Technopak Advisors, a New Delhi-based retail consultancy firm.
Around 25% of the $1 billion online sales come from tier II cities, according to the Technopak report.
Experts say investor interest is quite high in the online fashion retailing space. Scale is very important for investors in online fashion retailing, as with ecommerce, said Srikanth Narasimhan, director, Veda Corporate Advisors Pvt. Ltd, an investment bank.
“With top companies more or less identified in the horizontal e-commerce space, investors’ interest is now directed at specialized verticals. Under the specialized verticals, fashion is quite attractive as growth margins tend to be better," said Narasimhan.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
