Ethnic wear brand Manyavar, owned by Vedant Fashions Pvt. Ltd, has started working on a proposed initial public offering (IPO) to raise ₹2,000-2,500-crore, said two people aware of the development, seeking anonymity.
The apparel retailer, which operates 600 stores across the country, also owns ethnic wear brands Mohey and Mebaz. It was founded by Ravi Modi in 1999. “The work on the IPO officially began started last week. The company has hired investment banks Kotak, Axis, Isec and IIFL to prepare its draft red herring prospectus. It seeks to raise ₹2,000 crore or more through the IPO, with existing private equity investor Kedaara Capital expected to sell a significant part of its stake. The finer details of the share sale, such as size of the primary and secondary offerings, are yet to be finalized,” said one of the two people.
Kedaara Capital has around 7.5% stake in the company, according to the filing with the registrar of companies (RoC), while the rest is held by Modi and his family. The PE investor had invested ₹250-300 crore in Manyavar In 2017, he added.
“Everyone is expecting a post-pandemic boom in consumption demand. Even before the second wave hit, the marriage industry had started seeing strong revival and, once the local lockdowns across states are relaxed, the demand should come back strongly,” said the second person.
Email queries to Modi, and Kedaara Capital did not elicit any response till press time.
Vedant Fashions reported revenue of ₹947.9 crore in fiscal 2020, compared to ₹819.79 crore in FY19, according to filings with the RoC. It reported a profit of ₹236.6 crore in FY20, against ₹182.6 crore in FY19.
“The business risk profile is underpinned by the strong brand positioning of Manyavar in the ethnic wear segment and its large retail footprint. Operating margin was healthy, estimated at around 35% over the three fiscals through 2020. Performance is likely to remain stable in the medium term, driven by the company’s leading market position in the men’s ethnic wear segment,” rating agency Crisil had said in July 2020. “The financial risk profile is supported by a strong net worth, estimated at ₹975 crore as on 31 March 2020. High cash accrual should limit dependence on debt to fund capital expenditure and working capital requirement.”
In 2018, TCNS Clothing Co. Ltd, which owns the popular women’s wear brand W, had raised ₹1,125 crore via its IPO.
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