Textile and branded apparel major Arvind Ltd recently announced that it is raising Rs 740 crore from Renuka Ramnath-led private equity firm Multiples Private Equity by diluting 10 per cent stake in its subsidiary, Arvind Lifestyle Brands.
The stake sale gives the brand business arm an enterprise valuation of Rs 8,000 crore, Arvind Ltd said in a statement.
The company’s debt currently stands at Rs 3,540 crore, which is expected to decline to Rs 2,500 crore once the deal is effective in November.
The brands business portfolio includes 15 licensed international brands such as Calvin Klein, Tommy Hilfiger, US Polo Assn, Ed Hardy, Arrow, Gant and Nautica. It (brands business) has clocked a revenue of Rs.2,300 crore for the financial year 2015-16. The revenue has been growing at a compounded annual growth rate of 25 per cent over the last three years.
Chairman and managing director of Arvind Ltd, Sanjay Lalbhai, said,”With India becoming the fastest growing economy in the world, we are confident of continuing this growth momentum and taking the business from over Rs.3,200 crore this year to Rs.9,000 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.”
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 Ltd for around Rs.150 crore by purchasing shares on the stock market.