Spencer's Retail, the flagship retail company owned by RP Sanjiv-Goenka Group, has joined in race to acquire Spykar Lifestyle, the biggest domestic denim maker.
Spencer's is in early stages of discussions with the private equity major - Avigo Capital, who holds controlling stake in Spykar and is looking for an exit from the company.
Avigo Capital, which had acquired about 60% stake in Spykar, is looking for an exit since March 2012.
Lincoln International is advising Avigo to find a buyer. Avigo, which has an investment worth Rs 55 crore in Spykar, is looking for an enterprise value of Rs 350 crore for Spykar.
Last year, Avigo, after roping in its global investor - Metmin Investments, had acquired about 30% stake in Spykar by investing about Rs 30 crore. Metmin Investments is owned by NRI tycoon Raj Bagri, who was the chairman of London Metal Exchange. In 2007, Avigo had invested about Rs 25 crore in Spykar.
According to sources in the know, apart from RP Sanjiv-Goenka Group, another corporate major - Aditya Birla Group is also in discussion for buying out Spykar to expand its retail brand portfolio.
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Two private equity funds - Everstone Capital and India Value Fund Advisors have also evinced interest in Avigo's stake in Spykar.
When contacted, S Harikrishnan, Managing Director of Avigo Capital has confirmed that they are in talks with PE funds as well as domestic groups. However, he refused to disclose further details. Mail sent to Spencer’s spokesperson did not elicit any response.
Though a few foreign retailers such as Adolfo Dominguez had shown interest in Spykar, they are not keen nowadays, as the fate of foreign direct investment (FDI) in retail remains uncertain, said another source in the know.
Spykar, established by Prasad Pabrekar in 1992, is a popular denim garment brand. Currently, Pabrekar holds 40% in the company.
Presently, Spykar products are sold through 1,000 multi-brand outlets and 198 exclusive brand outlets across the country. The plans of Spykar, the operations of which was hit by last year's recession, to launch children’s brand OYO have not take off yet.
Last week, Rs 9,000-crore RP Sanjiv-Goenka Group announced its plans to list Spencer's Retail, after demerging from CESC. The group has plans to induct a strategic investor into Spencer's.
Spencer's has achieved a turnover of Rs 714 crore in first six months of this fiscal, compared to Rs 560 crore in the same period last year. The popular labels of Spencer's include Island Monks (casual wear) and Mark Nicolas (formal wear), Asankhya (women’s ethnic wear), Scorez (sportswear) and La Bonita (footwear).
Spencer’s Retail Limited runs about 200 stores, including 30 large format stores across 40 cities in India.