Spencer’s Retail, flagship company of RP-Sanjiv Goenka Group, has joined the race to acquire Spykar Lifestyle, the biggest domestic denim maker. Spencer’s is in early stages of discussions with Avigo Capital, a private equity (PE) major that holds 60 per cent stake in Spykar.
Avigo has been looking for an exit since March. Lincoln International is advising Avigo on the buyer. Avigo has investments worth Rs 55 crore in Spykar and is looking for an enterprise value of Rs 350 crore.
Last year, Avigo, after roping in its global investor, Metmin Investments, had acquired about 30 per cent stake in Spykar by investing about Rs 30 crore. Metmin Investments is owned by Raj Bagri, a non-resident Indian tycoon who was chairman of the London Metal Exchange earlier. In 2007, Avigo had invested about Rs 25 crore in Spykar.
According to sources, apart from the RP-Sanjiv Goenka group, Aditya Birla Group is also in discussions for buying out Spykar, to expand its retail brand portfolio. And, two PE funds, Everstone Capital and India Value Fund Advisors, have also evinced interest in Avigo's stake.
When asked, S Harikrishnan, managing director of Avigo, confirmed they were in talks with PE funds and domestic groups but refused to disclose details. Mail sent to Spencer’s spokesperson did not elicit a response.
Though a few foreign retailers such as Adolfo Dominguez had earlier shown interest in Spykar, they are not keen now, as the fate of foreign direct investment in the retail sector 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 per cent in the company. Spykar products are sold through 1,000 multi-brand and 198 exclusive brand outlets. Plans to launch a children’s brand have not taken off yet.
Last week, the Rs 9,000-crore RP-Sanjiv Goenka Group announced plans to list Spencer’s Retail, after demerging it from CESC. The group has plans to induct a strategic investor in the company. Spencer’s had a turnover of Rs 714 crore in the first six months of this financial year, compared to Rs 560 crore in the same period last year. Their popular labels include Island Monks (casual wear), Mark Nicolas (formal wear), Asankhya (women’s ethnic wear), Scorez (sportswear) and La Bonita (footwear). It runs about 200 stores, including 30 large format ones, across 40 cities.
