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Fairwinds PE eyes exit from footwear retailer Khadim

28 September, 2016

Private equity investor Fairwinds Private Equity is looking to exit its three-year-old investment in domestic footwear retailer Khadim India Ltd, according to a report.

The Mint newspaper first reported, citing people it didn’t name, that the investment firm, which holds a 35% stake in the company, is aiming to pocket three to four times the amount it had invested.

Fairwinds, formerly known as Reliance Equity Advisors, has hired Mumbai-based investment banking firm JM Financial Institutional Securities Ltd to look for potential buyers. The process is likely to start in mid-October.

Email queries to Khadim and Fairwinds didn’t elicit any immediate response regarding the development.

Reliance Equity Advisors, or Reliance PE, had invested Rs 90 crore in Khadim in 2013. Khadim, which competes with the likes of other homegrown retailers such as Relaxo Footwears, Bata India, Sree Leathers and Liberty Shoes, posted net sales of nearly Rs 550 crore last fiscal year.

Some of them have also attracted funding in the recent past. Public markets-focused private equity firm WestBridge Capital Partners, which marked its third investment this year with Relaxo Footwears Ltd, has increased its stake in the listed footwear maker in a recent deal.

In another recent deal, women’s footwear maker Catwalk Worldwide Pvt. Ltd roped in a larger industry peer as a strategic investor, almost three years after it kicked off a fundraising plan and held talks with a string of multinational shoe firms and private equity investors.

According to a report published in 2015 by credit rating firm ICRA, the Indian footwear industry is highly fragmented with nearly 15,000 small and medium enterprises operating largely in the unorganised segment. Unorganised segment dominates the market in sales volumes due to its presence majorly in the low-cost rubber and plastic footwear.

The report mentioned that the size of the Indian footwear sector is estimated at Rs 50,000 crore. The size of the domestic market is Rs 32,000 crore while exports account for the remaining.

Fairwinds

The PE firm, which was formed after a spin-off from Reliance Capital Ltd’s Reliance PE, has also exited private school chain Pathways this year. It was also selling its stake in Amber Enterprises in a secondary PE deal to Goldman Sachs.

In the past it has exited a few more portfolio firms.

Fairwinds manages Reliance Alternative Investments Fund – Private Equity Scheme I, a $200-million fund raised in 2009-10 from domestic investors with anchor investment from Reliance Group (earlier Reliance ADA Group). This fund is now fully invested.

Its portfolio consists of supply chain solutions firm Shankara Infrastructure Materials, digital printing firm Max Flex and Imaging Systems, kitchen appliances manufacturer Butterfly Gandhimathi Appliances, valves maker Dembla and consumer goods maker VVF.

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Fairwinds PE eyes exit from footwear retailer Khadim

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