Fabindia, PE investors eye Rs 1,200-crore fundraise

By Swaraj Dhanjal & Deborshi Chaki

Mumbai: Ethnic apparel retailer Fabindia and some of its private equity investors are looking to sell shares to financial investors to raise around ₹1,100-1,200 crore at a value of about ₹11,000-12,000 crore, following the postponement of the company’s IPO plans, said two people aware of the development.Some shareholders such as PremjiInvest and Lighthouse Funds are likely to sell shares as part of this round, the second person cited above said. PremjiInvest and Lighthouse were also planning to sell their shares in the IPO.

“Fabindia is working with ICICI Securities and JPMorgan to raise funds from new investors as the company’s IPO plans have been pushed back due to the volatility in stock markets. This will largely be a secondary sale of shares by existing investors of the company. Capital raised by the company will be used for repaying certain debt and for working capital needs,” said one of the people cited above.

PremjiInvest, through PI Opportunities Fund 1, owns a 20.37% stake in Fabindia as per the company’s DRHP filed in January 2022, while Lighthouse Funds owns a 1.45% stake. PremjiInvest intended to sell over one third of its stake through the IPO, while Lighthouse was looking at a complete exit from Fabindia.

A Fabindia spokesperson said that the company doesn’t comment on specific financial transactions. He added that several leading global ESG-focused funds have expressed keenness to invest in the company. “They appreciate our strong ESG track record of more than six decades, and believe in our business model, which is based on ESG values. During the roadshows last year too, we received a very positive response from global institutional investors, especially those focused on sustainability,” the spokesperson said.

“Fabindia is always open to exploring various options of liquidity. The company may reconsider filing an IPO in the future, depending on its need for growth capital and prevailing market conditions,” he added.ICICI Securities and JP Morgan declined to comment. Emails and text messages sent to PremjiInvest and Lighthouse Funds remained unanswered.

Fabindia filed its draft prospectus for an IPO to raise as much as ₹4,000 crore, which largely involved a secondary sale of shares by shareholders of the company and a primary fundraise of ₹500 crore. Apart from the promoters, existing shareholders including PremjiInvest, Lighthouse Funds, Bajaj Holdings and Investment Ltd, Kotak India Advantage Fund, NRJN Family Trust and other shareholders planned to sell their shares through the IPO.

The loss-making retailer planned to use the primary proceeds to largely repay debt on its books and for general corporate purposes.

Last month, the company said it had withdrawn its DRHP citing rough market conditions. The withdrawal of the DRHP will allow Fabindia to explore other options of liquidity, the company said in a statement.