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Private equity (PE) companies are eyeing the women’s ethnic wear market, especially the working women’s segment, as these offer good growth potential. Many brands such as W, BIBA and AND have emerged in the working women’s segment and these entities have managed to catch the attention of PE players.
“This year, the deals which have taken place show there are investors who are interested in India’s growth story. Many are looking at this space,” said Abhishek Bhangadiya, vice-president at Pioneer Invest Corp.
In recent years, many branded ethnic wear labels have been started, and attracted PE investment to expand and increase their pan-India presence.
Retail consultancy firm Wazir Advisors estimates the ethnic wear market to grow at 12 per cent by 2018 to Rs 500,000 crore from the current market size of Rs 250,000 crore. The women's ethnic wear market is expected to expand by 14 per cent to Rs 1.75 lakh crore in 2018.
Kishore Biyani had invested in BIBA and Anita Dongre’s AND and is now selling his stake in both these companies at three times the investment he made. The BIBA deal is likely to fetch Rs 300-350 crore, while the AND deal may fetch Biyani around Rs 200 crore.
Other players such as TCNS Clothing Company, which manufactures and markets women’s wear under the 'W' brand, had received first round of funding of Rs 60 crore from PE firm Matrix Partners in 2011. At present, W has over 125 stores across the country and it plans to open 50 more stores this year. Fab India has also received private equity funding.
“Most private equity players are looking at investing in the apparel sector in the next five years or so. They see it as investing in India's growth story and want to stay invested for the next five years. So far, we have not seen too many exits in this space,” said Abhishek Bhangadiya.
Also, PE players find it easier to invest in the brands and apparel space as there are no real hurdles that have to be crossed and no government interference like the way it is in other sectors such as Infrastructure and telecom.
The money that is pumped into these brands and apparel is used immediately and investors can see the money being used right away, which is not the case with other sectors. Also, the investment in this sector is not huge.
“It is only the branded ethnic women's wear space that has seen private equity funding coming in. These investors are mostly looking at exiting these investments only after five years and at three times the return,” said Prashant Agarwal, joint managing director of Wazir Advisors.
Earlier, private equity players invested in the kids wear segment, but that did not go down too well with the investors and they are now looking at the Indian ethnic wear market.
