Ace investor Rakesh Jhunjhunwala acquired a 12.74% stake in Mumbai-based apparel manufacturing firm Mandhana Retail Ventures Ltd (MVRL) on Wednesday, the day its shares listed on stock exchanges following its demerger from Mandhana Industries Ltd (MIL).
Jhunjhunwala purchased 2.81 million MVRL shares carrying voting rights through an off-market transaction, stock exchange disclosures show.
MVRL sells Being Human branded clothing promoted by Bollywood actor Salman Khan.
A back-of-the-envelope calculation indicates that Jhunjhunwala shelled out approximately Rs 64 crore (around $9.7 million) based on MVRL’s weighted average price on Wednesday, but not accounting for stock exchange charges and levies.
According to a report by The Economic Times, quoting MVRL’s director Manish Mandhana, Jhunjhunwala purchased shares pledged by MVRL with a non-banking finance company (NBFC).
“We (family and I) had pledged some share with an NBFC and he (Jhunjhunwala) has picked from there,” Mandhana was quoted as saying.
MVRL, incorporated in 2011, is the demerged entity of MIL after the latter approved creating a separate entity for the firm’s retail and trading business that held branding licence for the Being Human brand.
The Being Human brand is licensed by Being Human Foundation, a charitable trust founded by Khan.
MRVL was set up to carry out retail operations pertaining to the Being Human brand. However, later it was decided that the retail operations for the brand will be carried out as a division of MIL.
As per the demerger agreement, every shareholder of MIL holding three equity shares of Rs 10 each will receive two equity shares of Rs 10 per share of MRVL.
The proposed demerger was based on recommendations by SSPA & Co and a fairness report by Emkay Global.
“Given the success of Being Human clothing brand, we are looking forward to expand the portfolio of brands and retail concepts that the company would introduce considering the robust growth in consumerism in the country," said Mandhana who is also MIL’s joint managing director.
MIL, a diversified textile and apparel manufacturing firm, got listed in 2010. Its business includes cloth and yarn designing, yarn dyeing, weaving, processing, dyeing and garment manufacturing. The firm had recorded revenues of Rs 1,517 crore with a net profit of Rs 59.24 crore for the financial year ended 31 March 2014.
As per a separate disclosure, a firm named Chandrakanta Enterprise sold 1.7 lakh Mandhana shares (0.51% stake) on Wednesday for an average price of Rs 34.93 apiece, bulk deal data on NSE showed. A day earlier, another firm Olympus Trading and Advisor LLP sold 1.9 lakh shares for Rs 30.70 per share, bulk deal data on BSE showed.
Shares of MVRL were quoting at Rs 230 per share on BSE at noon on Friday, down 3.4% from Thursday’s close.
MIL shares were quoting at Rs 45.70 on BSE, locked in at the 10% upper circuit.
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