Reliance Retail Ventures Ltd (RRVL) on Tuesday acquired a majority stake in fashion designer Ritu Kumar’s Ritika Pvt. Ltd, reinforcing an emerging trend of corporate houses buying into luxury ethnic wear companies.
The size of the deal was not disclosed, but RRVL acquired a little more than 52% of the company.
RRVL, a unit of Reliance Industries, bought a 35% stake held by Singapore-based private equity firm Everstone in Ritika on Tuesday.
Everstone had acquired the stake back in 2014 for $16.6 million. The Reliance group company also bought an additional 17% to take a majority stake.
Reliance has been on a shopping spree for fashion labels, both foreign and Indian brands. Most recently, Reliance Brands acquired a 40% stake in Manish Malhotra’s MM Styles last week.
In January, Aditya Birla Fashion and Retail acquired 51% in Sabyasachi Mukherjee’s fashion house for about ₹398 crore, followed by a 33.5% stake in Tarun Tahiliani’s couture label in February for ₹67 crore.
In a July 2019 interview, Amrish Kumar, director at the fashion house and designer Ritu Kumar’s son, said that the company, one of India’s oldest designers, was looking to raise money and that Everstone was looking for an exit.
Over the years, the legacy couturier, Ritu Kumar, 76, who started the company in 1969, has set up several new brands across categories. Besides the flagship label Ritu Kumar—which sells daily and semi-formal ethnic wear—it launched Ri. Ritu Kumar, a premium bridal and formal wear in 2018. ‘Label by Ritu Kumar’, a designer brand for young urban India, was launched in 2002. An everyday clothing brand Aarké was launched in March this year. With its four fashion labels, the company has about 151 points of sales in India and abroad.
Isha Ambani, director, RRVL, said very few countries can match the sophistication, style and originality of design, especially in the printing and painting of textiles and weaves found in India.
“We are delighted to partner with Ritu Kumar, and together, we want to build a robust platform and customer ecosystem for our native textiles and crafts —both in India and across the world.”
Darshan Mehta, managing director and chief executive of Reliance Brands Ltd (RBL), clarified that Reliance Retail Ventures, which is also the holding company of RBL, will be acquiring Ritu Kumar and not RBL.
“When Reliance Brands has to acquire more than 50% of any business, it has to happen through RRVL since a fourth-generation subsidiary cannot be created. This is why the Manish Malhotra investment of 40% happened under the RBL brand.”
RRVL also houses brands such as Fresh, Smart, Hamley’s, Ajio and 7Eleven, among others. Mehta did not disclose whether RRVL will expand the number of stores for Ritu Kumar.
He, however, said RRVL, through its subsidiaries, has the experience of building and nurturing global luxury to premium brands in the country and has a commitment to Indian craftsmanship.
“I call this a partnership and not an acquisition. Fashion requires patient money. In fact, anything that is of substance would require that. And that’s what we bring to the table. This is also a strategic investment because this is a business that we truly understand every facet of right from real estate to training people, the supply chain, the craft and marketing,” he said.
Amrish Kumar said when fashion house Ritu Kumar was looking to raise money several years ago, there weren’t too many investors keen on brands in the more premium to accessible luxury segment. However, the landscape has since changed.
“Investors then were looking more at value-driven brands because that was the nature of the market, and that’s where the scale was,” he said.
Referring to the Reliance deal, he said, “This is, perhaps, a testament to the graduation of the consumer that strategic or conglomerate investors are looking for brands that have their own DNA and a competitive advantage and are not necessarily just driven by pricing and distribution.”
Reliance Retail reported revenue of ₹1.57 trillion for the financial year 2020-21. As of 31 March, it operated more than 12,000 stores.
Source: Mint