Citykart Retail Pvt. Ltd , a value apparel retail chain, on Thursday said it has raised ₹100 crore in equity from IDFC Alternatives and India SME Investments for a significant minority stake. The Delhi-based company said it plans to add 100 new stores and grow its revenue four-fold over the next few years. This is the first external round of funding for Citykart.
Mint had reported on 28 March 2017 that Citykart is planning to raise ₹100 crore to expand its store network.
Founded in 2016, Citykart has an asset-light model with modern ambience stores in large retail malls across various small towns and cities in Uttar Pradesh and Bihar. In the last two years, Citykart has doubled its store count from 18 to 40, a company statement said. Its revenue has grown at a compounded annual growth rate of 32% over the same period. Citykart will utilize the fresh funds primarily to expand into Tier II to Tier IV towns in northern and eastern India, besides strengthening its back-end operations.
Citykart is promoted by Sudhanshu Agarwal, the company’s founder and chief executive, who was previously associated with private equity fund TPG Capital-owned retail business TPG Wholesale (Vishal Mega Mart) and Vishal Retail Ltd.
“Citykart is addressing a large and untapped opportunity of providing fast fashion apparel at affordable prices to its customers in smaller towns and rural areas," said Girish Nadkarni, partner, IDFC Alternatives. “We are delighted to partner with Citykart to fulfil its vision of bringing joy to its customers and raising their spirits through its superior merchandise."
This is the fourth investment from IDFC Private Equity Fund IV and the first investment from this fund in the retail space. The fund focuses on sectors that leverage the Indian demographic theme such as consumer products and services, financial services, and healthcare. IDFC Alternatives, which first launched a private equity business in 2002, currently manages over $3.4 billion of assets.
Set up by Mitin Jain, India SME Investments focuses on high-growth, small- and mid-size companies in India. “India SME Investments believes that Citykart offers the right opportunity to participate in secular growth story driven by consumption demand from Tier 3 and 4 centres in India," the statement said.
Amit Gupta and Anil Khatri of Coralbay Advisors were the advisors to Citykart for the deal.
On 5 November, Mint had reported that global asset manager Investcorp is in the process of acquiring the private equity business of IDFC Alternatives, and is looking to sell IDFC’s investments that are less than $40 million. Investcorp has clubbed the smaller investments of IDFC PE and is on a lookout for a potential buyer for the portfolio. The PE business is now being sold separately to Investcorp, which is also buying the real estate investment business of IDFC Alternatives.
IDFC has marked its alternatives business as non-core to its strategy, and is focusing on building a bank with a strong retail loanbook. It is currently amalgamating itself with Capital First Bank to form IDFC First Bank.