Global private equity fund Advent International has acquired a significant stake in leading innerwear company Dixcy Textiles for an undisclosed sum, betting on the fast-growing category that has seen unprecedented traction for brands and an organised retail play.
The company’s founder and managing director, Prem Prakash Sikka, will retain a stake in the company and continue as the chairman following the completion of the transaction, the company said in a statement on Thursday. Although the financial terms of the transaction were not disclosed, sources told ET that Advent could be investing up to Rs 700-800 crore ($125 million) to professionalise the business and drive growth.
Once fully invested, the fund will end up with a controlling stake in the company. This will be Advent’s fourth investment in India since 2015 following its buyout of Crompton GreavesBSE 0.95 % Consumer Electricals, QuEST Global and ASK Group.
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The company has been investing in India for the past 10 years and opened an office in Mumbai in 2009. Tirupur-based Dixcy that sells under the flagship Dixcy Scott brand name was founded by Sikka in 1982. The company also sells products including casual wear, such as track pants, shorts and polo t-shirts, in India as well as West Asia and Singapore.
It has a network of more than 1,000 distributors, and supplies its products to over 1,20,000 retail outlets across the country. For the financial year ended March 31, 2017, the company, with 3,500 employees, had revenues of Rs 780 crore ($120 million). “Dixcy is a well-positioned brand with a strong distribution network in an attractive industry,” said Shweta Jalan, head of India at Advent International.
“The innerwear market in India is expected to grow at double-digit rates over the next five years, driven by an increased per capita spending and consumer demand for higher-quality products.
We see significant opportunities to create value by investing in distribution, sales and product innovation, and improving procurement and production efficiency.” Globally, Advent has significant investment experience in the retail, consumer and leisure industries. Over the past 27 years, the firm has invested more than $9 billion in 71 companies worldwide.
The men’s branded innerwear market in India has Jockey, marketed in India by Page Industries, at the high end followed by Rupa and Co, the owner of Macroman, Frontline and Euro brands; Lux Industries, that sells Lux Cozi brand; and Dollar Industries, that owns Bigboss and Club brands in India. Avendus estimates that the men’s branded innerwear market in India stands at Rs 11,000-12,000 crore.
The industry has been growing steadily at 13-15%, said Ritesh Chandra, executive director and head, consumer, FIG and business services group, Avendus Capital. “The men’s innerwear market presents a very attractive niche and there exists a good opportunity for differentiated growth in the sector.
