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Spykar asks Lincoln to find buyers

Reghu Balakrishnan  |  Mumbai 

After Lilliput Kidswear failed to rope in a strategic buyer for the company, another apparel major is gearing up its sale process. The management of Spykar Lifestyle, a leading player in the denim garment space, has appointed global investment bank Lincoln International to find out potential buyers. The talks with possible buyers would begin from next month. Private equity (PE) firm Avigo Capital Partners holds a 60 per cent stake in Spykar.

Achal Ghai, CEO of Avigo Capital, confirmed the development and said, “MNCs have shown an interest in Spykar. We are waiting for the audit report, which is expected next week. We hope to start the discussions from next month.”

The valuation of the company is expected to be in the range of Rs 300-500 crore, according to Ghai.

Spykar, established by Prasad Pabrekar in 1992, manufactures casual wear and accessories for men and women.

According to industry experts, global apparel brands have always been attracted towards the rapidly growing $37-billion Indian apparel market. The growth is driven by rising disposable income, young population, changing consumer mindset and increasing penetration of organised retail, they opine.

Deepesh Garg, managing director, o3 Capital, said, “With the opening up of foreign direct investment (FDI) in single brand, global apparel players have started considering buyout of an Indian brand. This, as an entry, would also help avoiding conflict between Indian and foreign partners. Strong distribution network would be one of the key differentiators for considering the buyout option, since most of the global apparel players would like to use this platform to launch their own existing brands in the country.”

Lincoln International started Indian operations in July 2011 by opening an office in Mumbai. T N Giridhar, former head of M&A at ICICI Securities, had been appointed as the managing director of Lincoln-India. An e-mail query sent to Giridhar remained unanswered.

Last year, Avigo acquired the control of Spykar from promoters after roping in global investor Metmin Investments. Both had acquired 30 per cent stake in Spykar by pumping in Rs 30 crore. Metmin Investments is owned by NRI tycoon Raj Bagri, former chairman of London Metal Exchange. In 2007, Avigo had invested about Rs 25 crore in Spykar. Spykar's founder Prasad Pabrekar holds 40 per cent in the company.

Another apparel chain that has been looking for a buyer is Lilliput Kidswear. Following its disputes with PE investors Bain Capital and TPG over allegations of fudged accounts, Lilliput founder Sanjeev Narula decided to sell the company. However, after talks with L Capital, the PE arm of luxury group Louis Vuitton Moët Hennessy, failed, Narula looks for a corporate debt restructure (CDR).

Last year, Vishal Retail, was sold for Rs 70 crore to existing PE investor TPG after the company failed to restructure its debt.

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First Published: Fri, May 25 2012. 01:16 IST