Fabindia appoints i-bankers for up to $1 billion initial share sale

Fabindia Overseas Pvt. Ltd has hired five investment banks to help the ethnic wear retailer raise between $750 million and $1 billion, two people familiar with the development said.

The company has hired investment banks ICICI Securities, SBI Capital Markets, JP Morgan, Credit Suisse and Nomura, the people said on condition of anonymity.

Fabindia is the latest to capitalize on the buoyant investor sentiment that has propelled stocks to record highs.

As many as 38 companies have hit the primary markets this year, the most in a decade, raising more than ₹60,000 crore, according to data from stock exchanges. Many more are preparing or set to go public.

Fabindia is expected to submit its draft initial public offering (IPO) documents with the markets regulator by November, one of the two people said. Mint first reported in June that the company was exploring an IPO at a $2 billion valuation.

Fabindia may sell approximately 25-30% stake to the public in a mixture of primary and secondary share sales, the first person said. Depending on shareholders’ decisions to exit during the IPO, the issue size could be as small as $500 million, the second person said, adding that the IPO valuation has not been decided.

PremjiInvest, one of the company’s investors, will sell a part of its stake in the company during the IPO. Other investors in the company include Lighthouse Funds, funds managed by Axis Alternative Asset Management and Kotak Securities. Infosys co-founder Nandan Nilekani and his wife Rohini Nilekani are also shareholders.

A Fabindia spokesperson said the company has “considered various capital-related options from time to time”. “We also take advice from our bankers. At the right stage, we will discuss any plans with the board of directors and be guided by their decision. We have nothing further to comment on this subject at this stage,” the spokesperson added.

Fabindia Overseas’ sales rose by 2.3% to ₹1,508 crore in FY20 from ₹1,474 crore in the previous year. However, net profit shrank to ₹30 crore from ₹101 crore during the period under review, as per VCCEdge, the data intelligence platform of VCCircle.

Fabindia is yet to report its FY21 financials, but the second person cited above said that covid-year financials “may not be a meaningful metric for future growth”.

Spokespeople for SBI Capital Markets, JP Morgan and Credit Suisse declined to comment on the development. Other banks and PremjiInvest did not respond to queries till the time of going to press.

Fabindia sells apparel, home furnishings, furniture, gifts, jewellery, organic food, and personal care products through its 311 stores across 118 cities in the country and 14 international stores, according to its website.

Fabindia competes with brands such as Biba, Good Earth, W and Global Desi in the ethnic wear segment. In the personal care segment, its competitors include Biotique and Forest Essentials. Among the fashion labels, players such as Manyavar and GoColours are also gearing up for their debut on the bourses.

Fabindia first received private equity attention in 2007. That year, New York-based Wolfensohn Capital Partners invested $11.2 million for a 6.45% stake, valuing the firm at $180.6 million, according to VCCEdge. Four years later, Wolfensohn raised its stake to 8.96% for an undisclosed amount. In 2012, L Capital Asia and PremjiInvest put in $60.6 million in a transaction that comprised a primary infusion as well as a secondary purchase. Wolfensohn exited Fabindia in this round.

PremjiInvest had in fact made a partial exit from the company in 2019 when it sold a part of its stake to PIPE funds of Kotak Mahindra Bank and Axis Bank as well as Kotak Securities and non-bank lender Bajaj Holdings and Investments Ltd.