The last few months have witnessed a spurt of private equity investments in the kidswear market in the country. In April, Delhi-based kidwears brand Lilliput had two rounds of PE infusion from Bain Capital and the Texas Pacific Group for a 35% stake in the company, followed by Catmoss selling around 30% stake to Hong Kong-based Saif Partners.
The investment has been significant. Both Bain and TPG together pumped in more than Rs 350 crore in Lilliput, while the Catmoss transaction was estimated at Rs 70 crore.
India’s kidswear market in organised retail, which is estimated at Rs 3,500 crore, is growing at an annual rate of 10%. The premium segment brands such as Lilliput and Benetton are vaulting at 20%.
Analysts reckon that with rising household incomes and more branded apparels being available in the kids segment, parents are willing to spend more on apparels. “Private equity funds have been bullish on the growth of the retail sector. Moreover, India is the largest childrens’ wear market at present. Parents these days are willing to spend on children’s apparel because of the availability of branded apparels,” said Lalitha Banerjee, knowledge manager, retail & consumer practice, PricewaterhouseCoopers.
Retail expert Damodar Mall, who is also director of food strategy at the Future Group, said, “The organised retail sector is growing fast and needs capital to expand and achieve economies of scale. Consumer spending in any sector attracts a lot of PE interest.”
In May, it was reported that the retail arm of the Mahindra group, that operates 'Mom and Me' stores, may be looking to raise up to Rs 443 crore in the second round of funding over the next quarter for its expansion plans. Mahindra Retail, which opened its first store in the January of 2009, has around 15 operational stores, mainly in metros and Tier I cities. It received the first round of equity funding from ICICI Venture’s IAF Series 2 fund for 26% stake. It plans to roll out 150-250 stores in another two to three years. R Venkatraman, managing director, Mahindra Retail Private, said, “Currently, we are not discussing any investment.”
A monthly report by VCCEdge pointed out that India has emerged as one of private equity investors’ favourite investment destinations in April 2010, with the volume of transactions rising three-fold to $840 million or Rs 3,780 crore year-on-year. Moreover, a study by IDG Ventures.
Source: Financial Express