Fabindia plans to raise ₹250 crore in fresh capital to expand its store network and scale its e-commerce platform
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Ethnic wear retailer Fabindia will file draft documents for its initial public offering before the end of December to raise up to ₹4,000 crore, two people aware of the development said. The company’s shareholders approved the IPO proposal at an extraordinary general meeting on Saturday.
Fabindia plans to raise ₹250 crore in fresh capital to expand its store network and scale its e-commerce platform. Several investors of the 60-year old company will sell part of their stakes as well, taking the total size of the public offering to ₹3,800-4,000 crore, the people cited above said on condition of anonymity.
A spokesperson for Fabindia declined to comment.
“Footfalls have increased, the mood is optimistic, and the company is poised for steady growth. Right now, the priority is to stabilize and review the performance of existing stores, but the company will also add stores," one of the two people cited above said. “Currently, the e-commerce business contributes to 10-15% of sales, and Fabindia is planning to enhance this," he added.
Apart from farmers and artisan shareholders, Fabindia’s existing investors include PI Opportunities Fund, Bajaj Holdings and Investment Ltd, Axis New Opportunities, India 2020 Fund II Ltd, Kotak India Advantage Fund, Azim Premji’s private equity fund PremjiInvest, Infosys co-founder Nandan Nilekani and his wife Rohini Nilekani, Rekha Menon, chairperson, Accenture, and Sanjeev Bikhchandani, founder of Info Edge, filings with the registrar of companies show. Promoters own a 49% stake in the company.
Primarily known for ethnic wear, Fabindia has entered new product categories such as home and lifestyle, personal care and organic food over the years. It runs another subsidiary, Fabcafe, to serve healthy food using locally sourced organic ingredients for urban consumers. More recently, it launched its personal care range called Fabessentials.
Apart from being the biggest apparel retail IPO in the country, Fabindia will also be one of the few companies going public that has a strong track record on ESG (environment, social and governance), the second person cited above said.
“The company does not operate any factory of its own. Its business model is focused on sustainability by design, and it claims to have created a unique supply-side community with its model of partnering with over 50,000 artisans, weavers and craftsmen and over 2,200 farmers directly and almost 10,400 through associates. Many artisan and farmer families have been working with Fabindia for generations," this person added.
In FY19, Fabindia recorded revenue of ₹1,457 crore, up from ₹1,336 crore in the previous year and a profit of ₹101 crore, growing from ₹83 crore, according to a September 2020 credit rating report by Crisil.