Chennai-based private equity firm TVS Capital Funds is understood to be scripting a healthy exit from Landmark, a pan-Indian book and music retail chain owned by Tata Group company Trent Limited. TVS Capital would sell its 24 per cent stake in Landmark to the Tata Group firm for about Rs 100 crore, it is learnt.
TVS Capital had acquired the stake for about Rs 65 crore in 2009. The return, therefore, would be about 1.5 times.
Trent, Landmark and TVS Capital declined to comment on the transaction. However, three investment bankers privy to the development said the deal would be closed soon.
TVS Capital’s acquisition of stake in Landmark in 2009 had valued the company at Rs 270 crore. Based on Landmark’s revenue of Rs 196 crore for 2008-09, the revenue multiple during the investment was 1.38. Landmark’s current revenue is about Rs 350 crore, and the company is on an expansion mode.
Recently, the Rs 600-crore TVS Capital had exited third-party logistics service provider TVS Logistics Services. In the transaction, it had recorded cash on cash returns of 2.23 times, or an internal rate of return of 22.23 per cent. The fund sold its stake to private equity major Kohlberg Kravis Roberts, which, along with existing investor Goldman Sachs, pumped in Rs 268 crore ($53 million) into the firm.
Landmark was started in 1987 by Chennai-based entrepreneur Hemu Ramaiah. Later, the company was acquired by the Tata Group in two phases. It paid a total of about Rs 150 crore for the store chain. Landmark now operates stores across multiple formats, including ‘big-box’ stores in metros, airport and hotels.
At the end of 2009, when it raised money from TVS Capital, Landmark accounted for 20 stores. On June 30 this year, the number of Landmark stores stood at 29. In June, the retail chain announced it would invest about Rs 50 crore in two years to launch seven to eight large-format stores.
In its segment, Landmark competes with Shoppers Stop-owned Crossword. In the recent past, the segment saw tough conditions, and both companies reworked their expansion strategy due to a fall in demand. Early this year, Landmark opted to expand through the franchisee route, and this is helping the company reduce capital costs.