Mumbai: The shareholders of Credo Brands Marketing Pvt. Ltd, which owns the Mufti denim wear brand, are planning to sell a controlling stake in a deal that values the company at Rs600 crore, two people aware of the development said.
Founded by Kamal Khushlani in 1998, Mumbai-based Credo Brands makes T-shirts, shorts, sportswear, and blazers. Khushlani holds a 65% stake in the company while private investors hold the rest. Both Khushlani and the investors are planning to sell their stakes, the exact quantum of which could not be ascertained. “The promoters are in talks with a couple of US-based buyout funds as part of selling the business,” said one of the two people on condition of anonymity. Mint could not verify the names of these funds.
JM Financial Institutional Securities Ltd is helping Khushlani find a buyer for the business, the second person above said.
Brand Capital, the ad-for-equity investor from Bennett, Coleman and Co. Ltd (BCCL), bought a stake in Credo around eight years ago. Brand Capital and friends of Khushlani together own 35% in the company. HT Media Ltd, which publishes Mint, competes with BCCL in some markets.
Since 2013, Credo’s promoters have tried to help investors in Credo sell their holdings. In 2014, the firm was in talks with US-based private equity (PE) firm Carlyle Group. Carlyle had agreed to invest Rs200-250 crore in Credo, Mint reported in March 2014. The deal was called off at the final stage.
Emails and text messages sent to Khushlani on Friday were not answered. Emails sent to spokespersons for JM Financial and Sundaram Sivakumar, chief executive officer of Brand Capital, on Friday were not answered either.
The Mufti brand is available in 110 large format stores, 1,400 multi-brand outlets, and 250 exclusive brand outlets in India.
The denim wear market in India is projected to grow at a compound annual growth rate of 15% to reach Rs27,200 crore by 2018, a 2015 report by retail consulting firm Technopak Advisors said. Other brands in India’s denim wear market include Levi’s, Lee, Wrangler, Spykar, Numero Uno and Killer.
“Western casual wear market in India is dominated by established national players such as Kewal Kiran and Arvind as well as retailers who are selling at their own outlets. We believe growth in this market will be driven by private label retailers,” Ankur Bisen, senior vice-president, retail, and consumer, at consultant Technopak Advisors. Kewal Kiran Clothing Ltd sells brands such as Killer, Easies, LawmanPg3, Integriti. Arvind Ltd sells denim brands such as Flying Machine, Ruf & Tuf, and New Port University.
India’s apparel space has been on the radar of venture capital and PEs for the past few years.
In August, US-based PE firm TA Associates Management Lp invested $140 million for a minority stake in TCNS Clothing Co. Pvt. Ltd, a leading women’s apparel platform that sells popular fashion brand W.
Several mid-sized apparel makers have initiated talks with private equity firms to raise funds or sell a business, encouraged by successful fund-raising by womenswear brand W. Brands such as Esjay International Pvt. Ltd, which owns women’s apparel brand Chemistry, and Soch Apparels Pvt. Ltd has hired bankers to find suitable investors for the business, Mint reported on 16 September.
