Textile and branded apparel major Arvind, the flagship company of the Lalbhai group, on Tuesday said the company is raising R740 crore by selling 10% stake in its 100% subsidiary Arvind Lifestyle Brands business to private equity firm Multiples to reduce debt of the parent company with the proceeds.
Post the deal, the overall debt at the group level would decline to R2,500 crore.
The stake sale would give the brand business arm an enterprise valuation of around R7,400 crore, the company said in a statement. Aura Securities has the highest stake of 37.69% in Arvind while Sanjay Lalbhai has 0.31% stake in the company.
“India is the fastest growing economy in the world and we are confident of continuing this growth momentum and taking the business from over R3,200 crore in FY17 to R9,000 crore by 2022. This transaction helps Arvind unlock the value that the brands business has accomplished in a short period and add financial muscle to future strategic opportunities for the group,” said Sanjay Lalbhai, chairman and managing director of Arvind.
This is the second investment by Multiples PE in Arvind. In January 2014, Multiples PE had picked up a little under 4% stake in Arvind for around R150 crore by purchasing shares from the stock market. The brands business portfolio includes apparel brands such as Calvin Klein, Tommy Hilfiger, US Polo Assn, Hanes, Sephora, Ed Hardy, Arrow, Gant, Nautica, Gap, Aeropostale among others.
“After Reliance Brands, Arvind has the best brands in its portfolio. The funds apart from retiring debt could also be used for expansion of its brand portfolio and strengthening the brands business,” said Arvind Singhal, chairman, Technopak.
Arvind has a wide portfolio of brands catering to all men, women and children.