LVMH arm L Capital Asia to put Rs 750 crore in Raymond Apparel

NEW DELHI: The private equity arm of the world's biggest luxury products group, LVMH, is negotiating to invest about $150 million ( Rs 750 crore) in Raymond Apparel, two people familiar with the discussions said. The deal between L Capital Asia and the Raymond Group arm for a minority stake, if it goes through, will be the largest private equity investment in an Indian apparel company.

The exact quantum of the stake under negotiation could not be ascertained but one of the people said it is between 10% and 20%.

Ravi Thakran, managing partner of L Capital Asia, declined to comment. Raymond did not reply to an email sent on Saturday but a senior official denied being in talks with L Capital Asia.

Raymond Apparel owns several popular brands.

SPIKE IN INDIAN APPAREL MARKET

Raymond Apparel owns brands such as Park Avenue, Parx and Notting Hill, which are sold at its exclusive retail stores The Raymond Shop and multi-brand outlets across India and West Asia. It is fully owned by listed entity Raymond Ltd, which is run by Chairman and Managing Director Gautam Hari Singhania.

Raymond is looking to sell a stake in the apparel unit because it is planning an acquisition in the domestic market and wants to expand into new regions internationally, a source said.

The growth of organised retail, a young population and rising incomes are leading to a spike in private equity interest in India's apparel market, which consultancy firm McKinsey has estimated will be worth $40 billion in 2015. Just last week, the investment arm of Wipro Chairman Azim Premji bought a 7% stake in Fabindia. In other prominent deals, L Capital last year bought a stake in Genesis Luxury while Franklin Templeton invested in Mumbai-based Kimaya Fashions.

Although India's apparel market is large and growing, it is overwhelmingly dominated by unorganised players. Raymond's main competitors are the Aditya Birla Group's Madura Fashion & Lifestyle and Arvind Brands.

Last year, there was speculation that Aditya Birla Group Chairman Kumar Mangalam Birla may sell his stake in Madura, which owns brands such as Louis Philippe, Van Heusen, Peter England and Allen Solly, to Apax Partners, but a deal did not materialise.

Amit Gugnani of retail consultancy Technopak Advisors said Madura Garments has a bigger portfolio than Raymond in terms of the number of brands. "But Raymond does have a large distributor base and a huge opportunity to expand further."