Multiples PE to invest $110 mn in Arvind Fashions
Arvind Fashions | Photo Credit: Shah Junaid/VCCircle

Textile company Arvind Ltd said on Tuesday Multiples Alternate Asset Management Pvt. Ltd has agreed to buy a 10% stake in its brand business arm for Rs 740 crore ($110 million).

The deal pegs the enterprise value of Arvind Fashions Ltd at Rs 8,000 crore, Ahmedabad-based Arvind Ltd said in a stock-exchange filing.

Multiples PE, the private equity firm founded by Renuka Ramnath, is already an investor in Arvind Ltd. It had invested in the company in January 2014 and held a little over 4% stake in the apparel maker at the end of September this year.

The transaction helps the company unlock the value for the brands business and add financial muscle to future strategic opportunities for the group, said Sanjay Lalbhai, chairman and managing director at Arvind Ltd.

The company said that Arvind Fashions has been growing at a compounded annual pace of 25% for the past three years and clocked sales of Rs 2,300 crore for 2015-16. It aims to take the business from an estimated Rs 3,200 crore this year to Rs 9,000 crore by 2022, Lalbhai said.

The unit’s portfolio includes brands such as Calvin Klein, Tommy Hilfiger, US Polo Assn, Ed Hardy, Hanes, Arrow, Gant and Nautica.

The textile company also said that India’s apparel market is likely to grow at a compounded annual pace of 13% from Rs 320,000 crore in 2015 to Rs 750,000 crore in 2020, helped by favourable demographics, increasing urbanization and rising consumption.

Arvind Ltd posted consolidated revenue of Rs 8,581 crore for the financial year ended on 31 March 2016. The deal with Multiples PE pushed its shares almost 13% higher to Rs 407.80 apiece on the BSE, the highest level in at least a year and giving the company a market value of Rs 10,489 crore.

Multiples’ investments

This is Multiples' fourth investment out of its second-sector agnostic fund, which it wrapped up in May. With this fund the private equity firm crossed the $1 billion assets under management (AUM) mark, coupled with the assets under its first fund.

The second fund has two vehicles—the main fund with $550 million and the co-investment fund with $135 million, Ramnath told VCCircle last month. The co-investment fund invests along with the main fund in larger-sized deals.

The investment from the second fund includes a follow-on investment in multiplex chain operator PVR Ltd, its portfolio company from the first fund.

The fund has also invested in Mumbai-based housing finance firm Vastu Housing Finance Corp and contract development and manufacturing firm Encube Ethicals Pvt. Ltd.

The second fund would be fully deployed in the next two-and-a-half years in 10-12 companies, Ramnath said last month. It would invest $50-100 million, compared with the ticket size of $20-25 million for its first fund.

The PE firm will look for investments in financial services, IT (excluding traditional services), healthcare and pharmaceuticals, besides consumer and stressed/turnaround themes from the second fund.

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