Mumbai-based salon chain Enrich is set to raise private equity funding from JM Financial Ltd's private equity fund. Sources familiar with the development said, JM Financial India Fund has agreed to a commitment of around a $10-million in funding, which may include both secondary and primary stake sales. The chain, which currently has around 15 salons in Mumbai, is planning to expand its operations other geographies across the country.
The $225-million private equity fund had earlier made its bets on the increasing income of urban Indian population when it invested in Genesis Colors, a high-end fashion retailer. It had exited this
investment with around 2.5x returns back in 2008.
Enrich, which claims to be the largest unisex salon chain in Mumbai, was founded in 1997 with a salon in Mulund and became a private limited company in 2004. The firm has already started its expansion into other metros by opening one store each in Pune and Bangalore, as per its website. Through its division, Enrich Education also provides training in hair styling and beauty therapy. o3 Capital is learnt to be advising Enrich Salons on this transaction.
A JM Financial spokesperson declined to comment on the development. VCCircle could not reach Enrich for its comments.
A report by FICCI-Ernst and Young in 2009 said that India's wellness market stood at Rs 11,000 crore and is expected to grow at about 30-35% over the next five years due to rising consumerism, globalisation and changing lifestyles. The report added that services like ayurveda treatment, alternative treatment centres and salons require lower investment and thus also have lower payback periods of up to three years.
The beauty and fitness space has earlier attracted attention from private equity and venture capital investors. Helion Venture Partners invested Rs 20 crore in YLG, a chain of salons and spas, last year. Beauty and wellness player VLCC has raised private equity funding from CLSA Capital Partners and Everstone Capital's Indivision fund.
Also, the investor interest in this space has increased after the recent listing of Talwalkars Better Value Fitness, which owns one of the largest and oldest fitness chains in India. Talwalkars's Rs 77.5 crore was subscribed 28 times by investors and its share price has doubled since listing in May this year. Birla Pacific Medspa, part of Yash Birla Group, has also filed a DRHP with SEBI to raise Rs.65.17 Cr through IPO.
JM Financial manages a $225 million multi-sector growth capital fund, which is co-sponsored by Old Lane Partners, a hedge fund run by Vikram Pandit which was acquired by Citigroup. Some of its other investments include Mumbai based pharmaceutical company DiagnoSearch Life Sciences; Samson Maritime Ltd, an offshore logistics and support services provider; International Tractors, a farm-equipment manufacturer; Sona Group, an auto components co. and Pre-Media Global, a KPO.