TVS Shriram Growth Fund I has made an investment of Rs 65 crore ($13 million) in Tata Group's books and music retail chain Landmark Ltd.
The fund, managed by TVS Capital Funds Ltd, has taken nearly a 25% stake, which values the retailer in excess of Rs 260 crore. Landmark is a subsidiary of Trent Ltd, which operates the lifestyle retail chain Westside and hypermaket stores under Star Bazaar. Landmark has 20 stores in nine cities with over 2 lakh square feet of retail space. It
reported revenue of Rs 196 crore for fiscal year ending March 2009. The funds will be used expansion of the chain to other cities.
While TVS Shriram has bought shares worth Rs 50 crore in Landmark from Trent, the rest Rs 15 crore was invested through a fresh issue, the Tata group company informed stock exchanges.
"Organised retail is an interesting sector for us as we are a consumption-focused fund. Also there is a significant opportunity to expand across metros and even tier - II cities," said Suresh Raju, executive director at TVS Capital.
Landmark started operations in Chennai in 1987 and now operates multiple formats like 'Big-Box' stores in metros, airports and hotels. Landmark boasts of 100,000 titles both in music and books. It also sells products like gifts, stationery, toys, gaming and technology
accessories. This is approximately a Rs 16,000 crore market of which around 10% is organised, said Raju. The company also has an e-commerce site called www.landmarkonthenet.com. It has a presence in cities including Chennai, Bangalore, Mumbai, Vadodara, Gurgaon, Pune, and Lucknow.
Book retailing has seen PE interest in the past. ICICI Venture along with Raheja group-promoted Shoppers' Stop had taken over Crossword, another book retailer, back in 2000. The PE firms stake was later bought out by Shoppers Stop in 2005.
Interestingly, TVS Capital has Landmark's founder and former CEO Hemu Ramaiah and also its former CFO Jai Subramaniam as its venture advisors. This gives TVS Capital the comfort, understanding and the ability to help expand this business, adds Raju.
In 2005, Trent acquired a majority 76% stake in Landmark - 75% from Nataraj Ramaiah, Hemu Ramaiah’s brother, and 1% from the latter - for Rs103.6 crore. This valued the company then at around Rs 135 crore. Trent then bought the remaining 24% stake from Hemu Ramaiah for an undisclosed amount last year.
"Landmark is a marquee investment for us and we are excited to enable the next wave of growth at one of the leading specialty retailers in India," said Gopal Srinivasan, founder and chairman of TVS Capital, who would also be joining Landmark's board. This is the third
investment of TVS Capital, which has also invested in Nine dot Nine Mediaworx and TVS Logistics. TVS Shriram Growth Fund I is a Rs 600 crore rupee fund focusing on mid-market companies.
TVS Capital is upbeat on the specialty retail sector. It's now looking to invest in food related businesses, education, healthcare delivery, among others. The Chennai-based PE firm is also eyeing business services which provide security, facilities management and catering.