Private equity route for luxury retail majors

Niche players in the luxury retail sector are attracting private equity behemoths like never before. As credit squeeze tightens, companies see merit in going in for private equity (PE) as they not only fund expansions but also help these brands to leverage on a PE's global portfolio.

For PE companies, it is a means of making quick bucks on the funds they have invested, say analysts. Kimaya Fashions has bagged Rs 60-crore funding from Franklin Templeton Private Equity Strategy after diluting about 20 per cent stake. PE fund L Capital Asia, sponsored by luxury goods conglomerate Moët Hennessy Louis Vuitton (LMVH), has bought 25.5 per cent stake in Genesis Luxury Fashion. While Avigo Capital Partners, a Delhi-based PE firm, has invested in denim-maker Spykar Lifestyles.

“There is an increasing feeling that India is a strong contender for being the next fashion capital of the world. By leveraging the formidable platform that Kimaya has, the current development will provide impetus to the Indian designer wear industry,” said Mr Pradeep Hirani, Chairman, Kimaya Fashions.

Private equity fund L Capital Asia, which invested in Genesis Colors, said the deal, to be done in two tranches, may see the PE fund hike its stake and ultimately invest $25-100 million. L Capital is expected to provide Genesis with access to cheaper media-buying rates, while Genesis is expected to leverage LMVH group's expertise in inventory and working capital management.