Debt-ridden apparel company Lilliput Kidswear is in talks for a fresh round of fundraising. People in the know said the company’s management was holding talks with two Chinese private equity (PE) firms to raise about Rs 300 crore to fund expansion.
The management of the cash-strapped retailer is also holding discussions with a couple of Chinese apparel makers to bring strategic investors into the company. Lilliput, which is ready to dilute about 30 per cent stake, is seeking total valuation of Rs 1,500 crore for the company.
When contacted, Sanjeev Narula, promoter of Lilliput, confirmed the development.
In May, L Capital, the PE arm of luxury group LVMH, backed out from talks with Lilliput for a minority stake buyout, owing to a valuation mismatch.
The company, which has a debt of Rs 859 crore, restructured Rs 586 crore of debt and it is expected the restructuring would be completed by the end of this month, said officials privy to the development. Major lenders—Allahabad Bank, Axis Bank and Oriental Bank of Commerce—have agreed to pay Rs 100 crore as working capital with an 18-month moratorium.
Last year, PE investors in the company had accused Narula of fudging the company’s books and not providing auditors access to the company’s financials. Narula alleged the investors were trying to stall the company’s Rs 850-crore initial public offering and seize majority control.
In November 2011, Narula had approached the Delhi High Court, seeking to restrict the PE investors from selling their stake in the company.
He had also approached the Company Law Board, alleging the PE investors were obstructing the functioning of the company. Last week, Sanjeev Narula withdrew all the cases against the PE firms, after they sold their 45 per cent stake to Narula, with no returns. In April 2010, Bain and TPG had together invested $86 million for a 45 per cent stake in Lilliput.
