Knock, knock, it's equity

Private equity players such as JM Financial group, Texport Syndicate and others look at design as an investment sector The next area of action as far as private equity goes will be fashion design. Already, a lot of action is afoot in terms of closed door meets, due diligence exercises and individual brand valuations of fashion designers. According to well placed sources, designers such as Tarun Tahiliani, Suneet Varma, Rohit Bal, Ashish Soni and Rahul Khanna/Rohit Gandhi have already been approached by private equity players who want to make strategic investments. This development comes at a time when Texport Syndicate, among the top 10 export houses in the country, is looking at not just buying equity, but also exclusive pacts with designers.

Texport has already signed on Mumbai-based designer Priyadarshini Rao, who in turn will bring out her Sepia range for the group. Morgan Stanley Financial Sevices, meanwhile, has picked up stake in Genesis Colors, which in turn has a licence agreement with JJ Valaya for his Quantum brand. This is in addition to the other designer brands from the Genesis stable such as Satya Paul and Deepika Gehani (which is completely owned by the group).

All this comes at a time that Indian designers are looking beyond their own enclaves for not just fresh funding sources, but also marketing expertise. There are many permutations of such partnerships. For instance, Syntex group has already invested in Rocky S, and the Dubai-based Behasa group has struck a recent deal with Manish Malhotra to launch his flagship stores.

It's had quite an effect. Suddenly, designers too are busy crunching figures and conducting due diligence exercises on their businesses and brands. For instance, industry sources affirm that UK-based Grant Thornton has already evaluated Ashish N Soni as a brand, and advised him on various growth strategies that can be adopted by it.

Tarun Tahiliani discloses that he has got Gautam Thapar and Sanjay Labroo on his board of directors, though he is not sure at the moment about going public. "I want to watch how things are evolving," he says, "I am not sure if I want to sell even a small part of our stake to anyone. But yes, things are moving at a very brisk pace in the industry."

Manish Arora also says that while he may not sell a stake in the brand, but "one of the US-based top six accounting firms has done a due diligence on our business". He has also got Delhi-based A Aneja & Company to assess the brand and business. "We are not considering any prososal as yet," he avers, "It is too early." JJ Valaya, who has recently struck a licencing agreement with Genesis Colors, says that PriceWaterhouseCoopers has advised him on Studio Valaya.

Clearly, it's more than just a fringe phenomenon now.

According to Sumeet Nair, director on the broad of FDCI, an apex fashion body, attracting investment is among the organisation's goals, and it has started happening in significant numbers.