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Business News/ Industry / Retail/  PE firms eye Future Ventures’ stake in Biba, AND brands
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PE firms eye Future Ventures’ stake in Biba, AND brands

At least six firms in the race; experts say brands could jointly fetch Future Ventures `450-500 crore

Future Group CEO Kishore Biyani. The sales are part of Biyani’s efforts to restructure and revive his retail empire that paid the price for rapid, and debt-fuelled expansion. Photo: Bloomberg (Bloomberg)Premium
Future Group CEO Kishore Biyani. The sales are part of Biyani’s efforts to restructure and revive his retail empire that paid the price for rapid, and debt-fuelled expansion. Photo: Bloomberg
(Bloomberg)

Mumbai: Several private equity (PE) firms have shown interest in Kishore Biyani-led Future Ventures India Ltd’s stake in apparel brands Biba and AND, said two people familiar with the matter. Both said the brands could jointly fetch Future Ventures 450-500 crore.

The PE firm names include Norwest Venture Partners (NVP), L Capital, General Atlantic and Sequoia Capital, they added.

“Term sheets have been signed and the deal will take a few weeks to get finalized," said a banker familiar with the deal who did not want to be identified.

“We are evaluating it. It is in a very preliminary stage. We could consider investing in one or both brands," said one investor who is looking at the transaction. He confirmed that there are at least six PE firms in the race. He asked not to be identified because he has signed a non-disclosure agreement (NDA) with Future Ventures.

“We get deals, deals and deals. There is an option we have and a chance to select. The options are plenty at the moment," said Kishore Biyani in a 9 May interview.

The sales are part of Biyani’s efforts to restructure and revive his retail empire that paid the price for rapid, and debt-fuelled expansion. The restructuring, and the ensuing stake sales are part of a larger effort to reduce debt from around 7,000 crore at the end of December 2012.

Future Ventures has a 22.86% stake in AND and a 28.3% stake in Biba. For the financial year ending 31 March, Biba Apparels had a revenue of little over 300 crore and an operating profit margin of 17-18%, said Siddharth Bindra, managing director of the company. He declined to comment on the transaction and Biyani’s investment in the company.

Designer Anita Dongre-led AND Designs India Ltd, which owns the brand AND, Global Desi and Anita Dongre (all three brand names owned by the company) posted a revenue of 275 crore for the financial year ending 31 March and operating profit margin of 15%, said Mukesh Sawlani, chief executive officer, AND Designs. He, too, declined comment on the deal.

Sequoia Capital and General Atlantic declined comment.

Niren Shah, managing director, NVP India and Sanjay Gujral, regional managing director, L Capital Asia (LVMH), did not respond to Mint’s e-mails seeking comment.

In December 2010, one of the promoters of the family-held Biba Apparels Pvt. LtdSanjay Bindra sold his 25% holding in the company for 50 crore to Biyani and his family.

“There has been an overall slowdown in the Indian economy which has impacted the apparel market. Moreover the like-to-like business of Biba has fallen in malls where we have set-up," said Bindra, who admits that he struck a good deal. Bindra launched a competing ethnic wear brand Seven East in early 2011 and has 21 of its 25 stores close to a Biba store.

The organized Indian apparel market is valued at $13.5 billion as on 31 December, according to Wazir Advisors, a retail consultancy firm. “In the last two years, the market’s volume growth has come down and growth is largely on account of high inflation and price," said Harminder Sahni, managing director, Wazir Advisors.

Venture Capital and PE firms have consistently shown interest in the apparel space on the back of domestic consumption. Investors pumped in $224.7 million in apparel firms in 2012, compared with $80.3 million across 12 deals in 2011, according to VCCEdge, which tracks investment activity in the country.

Thus far this year, there have been four deals in the apparel space worth $14.21 million.

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Published: 16 May 2013, 10:28 PM IST
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